San Francisco Fed President downplays differences in Fed statements, says wording is less important than actions

San Francisco Federal Reserve President Mary Daly downplayed differences within the Fed regarding the wording of policy statements, emphasizing that the Committee’s actions are the true policy signals.

In an interview on Thursday, Daly stated, "The wording of statements is less important than the actions of the (Federal Open Market Committee)," pointing out that the real signal from this meeting is that "everyone agreed on this decision." She also said she would not oppose the vote.

At last month's rate-setting meeting, three voting members raised objections to the post-meeting statement, which hinted at a future resumption of rate cuts.

They argued that rising oil prices due to the Iran war and increased economic uncertainty meant the policy statement should equally weigh the possibilities of rate hikes and rate cuts. This rare multi-member dissent drew market attention to the Fed's policy path.

Daly stated that there are currently no signs that surging energy prices are driving up medium- and long-term inflation expectations.

She noted it is "too early" to draw conclusions at this stage. If the Iran conflict ends, oil prices come down, and there is no spillover to the broader economy, the previous macroeconomic fundamentals may be restored.

Daly believes that the current monetary policy is in a "mildly restrictive" range, and once the U.S.-Iran conflict is resolved, there will be downward pressure on inflation.

At the same time, the labor market remains stable and is not generating inflationary pressures, giving the Fed policy space during its period of observation.