Fed’s Daly: No single most likely path for monetary policy
San Francisco Federal Reserve Bank President Mary Daly said that unless the Iran conflict resolves quickly and the central bank can simply "look through" a temporary increase in oil prices, it is not clear what the next move on interest rates will need to be, Reuters reported on Monday.
Key quotes
There are at least two possible paths for the economy.
Protracted conflict may amplify monetary policy tradeoffs.
Fed needs to stay flexible on monetary policy given risks.
Too much forward guidance risks a false sense of certainty.
Economy impact would be short-lived if the war resolves quickly.
Recognising uncertainty is optimal communication.
Policy is in a good place.
No single most likely path for monetary policy.
We need to remain flexible and respond to evolving risks.
Market reaction
At the time of writing, the US Dollar Index (DXY) is trading around 99.17, down 0.33% on the day.
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