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Mary Daly backs Fed hold, says September decision depends on incoming data

Mary Daly backs Fed hold, says September decision depends on incoming data

San Francisco Federal Reserve Bank President Mary Daly said the Fed can keep rates steady if tariff, oil and AI-driven price shocks fade, but may need to move quickly if inflation broadens.

Fact Check
The CNBC primary source confirms every core element: Philadelphia Fed President Anna Paulson is content with current rates at 3.5%-3.75%, described policy as mildly restrictive, backed last week's hold ('not a close call'), seeks more core inflation progress (core PCE 3.3% in June, underlying 2.4%-2.8%), and remains open to recalibrating. The Reuters/Yahoo article independently corroborates the same rate range and 'open mind' stance on the same date. The claim's characterization is accurate and well supported.
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Summary

San Francisco Federal Reserve Bank President Mary Daly said she fully supports the Federal Open Market Committee's decision to keep the federal funds rate target range at 5.25% to 5.50%, but warned the Fed may need to raise interest rates more aggressively if inflation spreads more broadly through the economy. Speaking in Tokyo, Daly said policymakers face two possible paths: temporary price shocks from tariffs, higher oil prices and increased investment in artificial intelligence that fade over time, or more persistent inflation as those pressures filter through the broader economy. She said the second scenario is becoming more likely and that, if inflation expectations begin to rise, the Fed's job of restoring price stability would become harder. Daly said long-term inflation expectations remain stable for now, reinforcing the Fed's data-dependent approach ahead of its next policy decisions.

Terms & Concepts
  • Federal Open Market Committee: The Federal Reserve body that sets U.S. monetary policy, including the benchmark interest-rate range.
  • Federal funds rate target range: The Federal Reserve's benchmark policy-rate band, which was held at 5.25% to 5.50% at the July 25-26 meeting.
  • Inflation expectations: The public's and markets' outlook for future inflation, which can influence wages, prices and central bank policy.