While speaking at a Banco de España conference in Santander, Spain, San Francisco Federal Reserve President Mary Daly said that she doesn’t see any signs of a lack of economic resiliency in the US, despite above-target inflation, per Reuters.
Key takeaways “AI investment shock has people wondering if it will be inflationary.” “If central bank acts too quickly it could prematurely bridle things, if you act too slowly it could be unwelcome for citizens.” “We are in early stages of a potential exponential rise in productivity gains from AI.” “In US there’s exceedingly strong investment growth.” “Labor market is stabilized.” “Inflation has risen on tariffs, oil price shock.” “Oil prices have come down, hope for relief.” “US monetary policy is slightly restrictive.” “That should help inflaiton come down.” “There is a scenario where Fed has to fight inflation.” “There’s also a scenario where growth doesn’t continue.” “Can’t decide right now, can’t give false guidance on rates.” “If Strait of Hormuz situation is resolved that would be a good thing.” “Oil back down is good news for consumers and economy.” “Housing inflation has been coming down in US.” Daly flags AI productivity upside while keeping inflation fight options open Daly’s remarks strike a cautiously balanced tone, with the FXS Speechtracker score at 6/10 modestly above the 5.7/10 historical average, signaling slightly firmer conviction but not a clear hawkish pivot relative to the historical average
The focus on an “AI investment shock” and the “early stages of a potential exponential rise in productivity gains from AI” frames technology as a potential disinflationary force over time, while warning that acting too quickly or too slowly on policy could either choke off growth or leave citizens exposed to persistent price pressures. Daly underscores strong U.S. investment, a stabilized labor market, and ongoing economic resiliency despite above-target inflation, but stresses uncertainty around future scenarios…