Fed’s Daly: Modestly or moderately restrictive policy still needed

San Francisco Fed President Mary Daly, in a Reuters interview, emphasized that above-target inflation remains her “focus” while the labor market is in “solid shape”.

With inflation still running above the Fed’s 2% target and uncertainty around the pace of its decline, Daly said it’s appropriate for monetary policy to remain in a “modestly or moderately restrictive” stance to guide inflation back to target.

Daly added that she’s closely watching for any signs of labor market weakening but hasn’t observed such signals yet. At the same time, she remains attentive to whether inflation continues to gradually ease or risks becoming sticky or re-accelerating.