Mary Daly, President of the Federal Reserve Bank of San Francisco, stated in a Reuters interview that a rate cut may be considered if the Iran conflict is resolved quickly and oil prices decrease, emphasizing that such a move is 'not out of the question' [1]. However, Daly also noted that if inflation remains elevated for longer than anticipated, the Fed would hold steady on rates until there is clear progress on reducing inflation [1]. She highlighted that the Fed had ongoing work on inflation even before the recent oil price shock, and now that work will take longer [1]. Daly assigned a lower probability to a rate hike compared to a cut or holding steady, and warned that persistently high oil prices would both increase inflation and hurt economic growth [1]. She observed that higher prices are already impacting the economy, with consumers pulling back on travel due to concerns about rising costs [1]. Daly stressed the importance of achieving 2% inflation, but cautioned against doing so at the expense of jobs, as this would negatively affect families [1]. She described US economic fundamentals as 'solid' and the labor market as being in a steadier place, with risks to the Fed's goals of full employment and inflation balanced [1]. Daly also mentioned that current policy is restrictive enough to put downward pressure on inflation while supporting a steady labor market, and that the Fed's policy position allows more time to assess the resolution of the conflict and oil price developments [1]. Regarding the Consumer Price Index (CPI), Daly said a high reading would not be a surprise, and the key question is whether a ceasefire persists, which would render the CPI 'old news' [1]. On the currency front, the US Dollar was the strongest against the New Zealand Dollar, gaining 0.28% [1]. It also appreciated against the Japanese Yen by 0.19%, the Canadian Dollar by 0.15%, and the Australian Dollar by 0.08% [1]. Conversely, the US Dollar weakened against the Euro by 0.26%, the British Pound by 0.25%, and the Swiss Franc by 0.17% [1].
CONCLUSION
Fed's Daly indicated that a rate cut is possible if geopolitical tensions ease and oil prices fall, but the central bank will hold rates steady if inflation persists. The US Dollar showed strength against several major currencies, reflecting market confidence in US economic fundamentals. The Fed's balanced approach suggests a wait-and-see stance amid ongoing global uncertainties.