San Francisco Fed’s Daly says policy slightly restrictive

Investing.com -- San Francisco Federal Reserve President Mary Daly said Thursday that U.S. monetary policy is slightly restrictive. She noted that strong investment growth in artificial intelligence technology and a stable labor market make the central bank's next move uncertain.

Daly spoke at a Banco de España conference in Santander, Spain. She said the Fed faces two possible scenarios. The first involves fighting inflation that proves more persistent than expected. The second involves economic growth that fails to sustain itself or investment that slows due to concerns about returns.

She said the drop in oil prices following the Iran war ceasefire is positive news for the economy and consumers.

Daly's comments came as the U.S. Bureau of Labor Statistics released data showing job growth slowed sharply last month. Traders responded by reducing expectations for a Fed rate increase this month and in September.

Daly had attended a global central banking conference in Sintra, Portugal, where Fed Chairman Kevin Warsh said he would disappoint anyone expecting the U.S. central bank to fail in containing inflation. Inflation has remained above the Fed's 2% target for six years.

Warsh highlighted the impact of artificial intelligence on the economy. He said AI is currently increasing demand but will eventually boost supply, creating opposing forces on inflation.

Daly also said that uncertainty about AI's economic impact prevents her from making a quick decision on interest rates.

You May Also Be Interested In

• Volkswagen expects India partner deal this year, Skoda CEO says
• Moderna shares soar on melanoma drug trial success
• Nvidia credit risk gauge hits new peak as SoftBank readies record bond issue