Jobs data leaves room for Fed policy tightening, Daly says

The jobs report brought good news and pointed to a solid economy, San Francisco Federal Reserve (Fed) President Mary Daly told CNBC in an interview on Friday. She said it “gives latitude to get inflation job done.”

With uncertainty persisting, Daly considered the decision to leave rates unchanged at the last meeting appropriate, although she said the Fed “will have to tighten policy further”. She also noted that “AI repricing signals slowing of demand growth might come down a little.”

Daly Signals Further Policy Tightening:

The jobs report brings welcome news

Wages are not growing at a booming pace

I would welcome greater confidence on inflation

A robust labour market provides room to finish the job on inflation

Further policy tightening will be necessary

Uncertainty made holding rates steady at the last meeting appropriate

So far, the AI repricing trade has remained orderly

Growth might ease a little if AI repricing points to slowing demand

The business outlook is viewed with cautious optimism

Looking beyond the 'painful' volatility, this is the sort of rebalancing one would hope to see

Interest rates could range from slightly restrictive to neutral

The decline in services inflation is not following the pattern we would expect