Fed President Mary Daly signaled a hawkish stance on Friday, citing a robust labor market as justification for further interest rate hikes to combat persistent services inflation.
San Francisco Fed President Mary Daly said on Friday the solid job report 'gives latitude to get inflation job done' and the Fed 'will have to tighten policy further.' A hawkish signal from a voting-era regional president supports expectations of higher rates, which typically lifts the US Dollar. She also noted services inflation is not coming down as expected. As only one policymaker's view amid stated uncertainty, the move may stay contained.
Daly said the Fed 'will have to tighten policy further' and that the strong job report gives the Fed latitude to finish bringing inflation down, which makes higher US interest rates more likely and the dollar more attractive.
Daly addressed the AI-driven volatility directly, saying 'AI repricing signals slowing of demand growth might come down a little' while calling the rebalancing the kind one would hope for. A Fed official endorsing AI valuation repricing amid 'painful' volatility weighs on the tech-heavy Nasdaq 100, as does her signal of further policy tightening.
She said the AI repricing trade has been orderly so far, that it signals slowing demand growth, and that stepping back from the 'painful' volatility this is the kind of rebalancing one would hope for.
San Francisco Fed President Mary Daly stated that the recent solid jobs report provides the central bank with the necessary latitude to continue its inflation-fighting efforts. Daly emphasized that further policy tightening remains on the table, noting that services inflation has not yet cooled to expected levels.
Daly said the Fed 'will have to tighten policy further' and that the strong job report gives the Fed latitude to finish bringing inflation down, which makes higher US interest rates more likely and the dollar more attractive.
She said the AI repricing trade has been orderly so far, that it signals slowing demand growth, and that stepping back from the 'painful' volatility this is the kind of rebalancing one would hope for.