Fed's Daly Signals Policy Stability, Cites Anchored Inflation Expectations

Federal Reserve Bank of San Francisco President Mary Daly expressed confidence in the current trajectory of U.S. monetary policy, describing the current stance as being in a 'very good place.' Speaking during remarks at UC Berkeley, Daly emphasized that the central bank's efforts to curb inflation are yielding results. She suggested that the current policy rate is sufficiently restrictive to meet the Fed's mandates without the immediate need for further adjustments. Daly specifically noted that both medium- and long-term inflation expectations remain well-anchored. This stability suggests that market confidence in the Federal Reserve's commitment to its long-term inflation targets remains intact, reducing the immediate pressure for aggressive policy pivots. For market participants, Daly's comments reinforce a narrative of policy stability. By suggesting that leaving rates unchanged would still be effective in restraining inflation, she signals a lack of urgency for immediate rate cuts, which typically supports the U.S. Dollar and maintains a floor for Treasury yields in the near term.