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Fed's Daly (2027 voter) says the job report good news, wage growth isn't booming, and real wages are falling

Newsquawk Staff ·

Inflation

  • Inflation has been high for too long and has to be the number one priority.
  • It's proving more stubborn than would like, and confidence that it's coming down needs to be higher.
  • There's uncertainty around tariffs, war, and AI, but stubborn inflation remains the central concern.
  • Interest rates are the tool that they have to do the job to get inflation down.

Policy

  • The September rate hike was the right move, and it was also good to be on hold at the last meeting.
  • Policy will have to be tightened further.
  • More information is needed on how much more tightening and when.
  • The approach needs to be deliberate.
  • Prepared to raise rates if it's called for.
  • Policy rates are likely slightly restrictive to neutral.
  • Policy is not as restrictive as it needs to be.

Labour market and growth

  • A strong labour market gives the Fed latitude to get the job done on inflation.
  • Not worried about a substantial decline in growth.

AI

  • The AI repricing trade has been orderly so far.
  • If it signals slowing demand, growth might come down a little.
  • Stepping back from the painful volatility, this is the kind of rebalancing you would hope for.

Business sentiment

  • Businesses want inflation to come down.
  • They're cautiously optimistic about the outlook.

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