Fed's Daly (2027 voter) says key problem the Fed has is inflation; not much evidence that AI is driving labour productivity up

Fed's Daly (2027 voter) says key problem the Fed has is inflation; not much evidence that AI is driving labour productivity up.

Remarks from a non-voting official carry weight mainly as a window into committee sentiment, and the San Francisco Fed presidency has historically sat toward the dovish end of the spectrum, so hawkish-leaning framing on inflation from that seat tends to read as more informative about the median than identical language from a known hawk. The substance here is two-sided: inflation named as the key problem argues against near-term easing and supports the front end holding higher, while scepticism that AI is lifting labour productivity pushes against the supply-side case that would let the Fed tolerate stronger growth with looser policy. That second point matters for the neutral-rate debate: officials who see productivity as unproven have tended to resist marking up r-star, which keeps the easing case dependent on disinflation actually arriving rather than on structural arguments. The pattern in past cycles is that such commentary raises the sensitivity of the next inflation and wage prints, since it frames the hurdle for cuts in data terms. The follow-ons are whether voting members adopt similar language and whether the AI-productivity scepticism spreads, since that shapes the long end through term premium rather than just timing at the front. As commentary from a 2027 voter rather than a decision, the signal is directional.