Fed’s Daly Warns of Weak U.S. Demand, Inflation Effects Limited to Goods

San Francisco Fed President Mary Daly cautions that tariff-related inflation is contained to goods, with services inflation and expectations remaining near the Federal Reserve’s target.

Summary

San Francisco Federal Reserve President Mary Daly stated that the U.S. economy could experience weak demand, while any inflation arising from tariffs is mostly limited to goods and remains controlled. She emphasized that the effect has not significantly extended to services inflation or public inflation expectations, both of which remain close to the central bank’s target.

Terms & Concepts
  • Tariff-related inflation: Price increases caused by import duties or trade barriers, affecting the cost of goods.
  • Services inflation: Inflation in non-goods sectors such as healthcare, education, and transportation, often driven by wage and service cost increases.
  • Inflation expectations: The outlook held by consumers and businesses regarding future inflation levels, influencing economic behavior and policy.