Mary Daly SF Fed President
- Expect growth and labor market to continue to slow
- Expect inflation to come down
- The Fed is very good data dependent
- My views and can it change as the economy does different things
- The CPI coming down is very encouraging, but most is energy costs and in food prices
- Supply disruptions improving his causing inflation to come down
- Core services inflation excluding housing that has shown no sense that it is coming down
- Have not seen core service inflation, down as we would like
- The biggest risk out there is that inflation expectations would start to drift in response to more persistent inflation
- Inflation moving down is most likely not going to happen in the coming year
- We are determined to bring inflation down
- When you see wage growth come down it's consistent with the employment picture slowing
- Still out of balance in labor market
- December wage data was one month of data, can't declare victory
- It is still too soon to declare victory and stop rate hikes
12:44 PM ET: Stocks are dipping on the comments from daily. The S&P is up 39 points at 3934. It was trading around 3940 at the start of her Q&A. The NASDAQ index was up at 10792. It is currently at 10764.
- We don't need to see inflation get a 2% before we stop raising and start to keep rates steady
- This phase of tightening is extremely challenging
- Reasonable/likely for rates to be 5% – 5.25%
- "Meeting by meeting" means we don't want to forecast uncertain decisions
- 50 basis points or 25 basis points are on the table for the next Fed policy meeting
- During rate hikes and gradual steps gives more chance to account for lags
- Not going to wall off a 50 basis point hike as not likely
- When thinking of policy I will be paying a lot of attention to core services ex housing in CPI
- Want to bring inflation down as gently as we can
- Estimate unemployment to rise to 4.5% or 4.6%
- Would be terrific if labor market balancing would come because employers are not looking for more employees
- Would be terrific if the unemployment rate comes up less
- Expect inflation to get into the low 3% by the end of this year and then get closer to 2% by the end of 2024
- To bring inflation down faster would require an enormous labor market pain
- Changing inflation target is not on the table at all
Daly - consistent with some of the other Fed speakers - tapped the brakes that policy easing is any where close. From Daly, to get inflation to 2% quicker would require more pain in the employment sector. She therefore would prefer the course of continued tightening.to ease up to 5% to 5.25% and then see.
The Dow is up 150 points at 33780. The S&P is up 38.41 points at 3933.48. The Nasdaq is up 207 points at 10776. That is lower from when she started to speak but not by much.