San Francisco Federal Reserve President Mary Daly stated that the U.S. economy is performing better than anticipated, citing progress in controlling inflation and maintaining a stable labor market. Daly’s comments follow the Fed’s continued push to stabilize the economy through higher interest rates, with signs that inflationary pressures are starting to ease.
Daly pointed out the resilience of the U.S. economy, crediting recent policy measures for the improved outlook. “The economy is clearly in a better place than it was several months ago,” she said, highlighting positive developments in inflation reduction and a strong labor market. Her remarks suggest that the Fed may be closer to reaching its goals of lowering inflation while minimizing economic disruption.
Her statements have raised expectations that the Federal Reserve might slow the pace of its rate hikes in the coming months. However, Daly warned that the Fed remains cautious and will continue monitoring key economic indicators like inflation, wages, and employment to determine future actions.
Although inflation has receded from its peak, Daly acknowledged that the Fed’s work is not yet finished. “We’ve made significant progress, but there’s still more to do,” she emphasized. The Fed remains focused on its dual mandate of maximizing employment and ensuring price stability as it makes policy decisions.
Market reactions to Daly’s comments were mixed, with some interpreting the remarks as a sign that rate hikes could slow down, while others remain cautious about the potential for inflationary pressures to return. Investors are paying close attention to the Fed’s next steps, particularly as central banks around the world balance the need for growth with inflation control. As the Federal Reserve navigates the recovery from the pandemic, Daly’s comments reflect the fine line policymakers must walk between fostering economic growth and keeping inflation in check. While her outlook is optimistic, she stressed that careful monitoring will be essential to ensure continued progress.
