Mary Daly, president of the Federal Reserve Bank of San Francisco, warned this week that the Fed’s push to restore price stability can’t come at the expense of the economy — a message that keeps markets braced for a cautious, data-dependent policy path.
Why it matters
- Daly reiterated that getting inflation back to the Fed’s 2% target is “crucial,” but stressed the central bank cannot do that by “harming the economy,” according to a summary reported by Chaincatcher.
- Her comments frame monetary policy as a delicate balancing act: rein in inflation without triggering mass layoffs that would violate the Fed’s dual mandate of price stability and maximum employment. As she put it previously, “you’ve given people low inflation, but you’ve taken their jobs,” which is “not the dual mandate.”
Where policy stands
- Daly has called policy “in a good place” and said the Fed can “afford patience” while it evaluates incoming data. She’s argued for a scenario‑based approach — “progress is not victory” — and warned against overreacting to noisy signals.
- Markets have interpreted this as signaling the Federal Open Market Committee may hold the policy rate in the current 5.25%–5.50% range for longer, delaying rate cuts until inflation shows sustained progress toward 2%.
What the markets are pricing
- Daly didn’t lay out growth, unemployment or precise timing for rate moves in the Jin10 summary, but her stance echoes broader caution among officials and analysts. Banks such as Goldman Sachs have pushed their expected first Fed cut out to September 2026 and forecast inflation nearer 2.9% for longer — a scenario that implies more restrictive policy and a tougher backdrop for risk assets.
Implications for crypto
- For crypto traders and investors, a prolonged period of higher-for-longer rates typically means increased headwinds: tighter financial conditions, greater volatility and a tougher environment for speculative assets. Daly’s insistence on incremental, data-driven decisions suggests the market should prepare for volatility around incoming CPI, jobs, and FOMC data rather than expecting an imminent easing cycle.
Bottom line
Daly’s latest remarks reinforce a central Fed theme: price stability is essential, but not at the cost of the labor market. That philosophy keeps the Fed on a narrow course — one that leans toward patience and data dependence, and keeps investors across bonds, stocks and crypto watching closely for clearer evidence that inflation is truly on track.
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