MNI BRIEF: Daly Says Fed Must Not Prematurely Declare Victory

San Francisco Fed President Mary Daly said the central bank has policy in a "very good place" right now as it has time to assess data to better understand what is happening in the economy and how inflation is progressing, but she is not thinking about rate cuts at all right now.

"It is still too early to know" if the Fed is done with rate hikes and "we must not prematurely declare victory over inflation," said Daly, according to a transcript from an interview with Boersen-Zeitung. "We are currently on the way to temporarily reaching 2%. But we are not interested in temporary price stability. We need to be fully sure that we are heading that way. We need more information before we can say that."

Asked about market pricing in rate cuts, Daly told the German newspaper: "The markets obviously have a different idea than we do of what the process of disinflation will look like. I'm not thinking about rate cuts at all right now...Discussions about interest rate cuts are not particularly helpful at the moment. We should continue to focus on lowering inflation."

"Policy is in a very good place. We have raised the key interest rate significantly. In my opinion, the risks of over- or under- under-tightening are now roughly balanced," she said in the interview, still leaving open the chance of a December hike. "I don't want to take any meeting off the table because we are constantly collecting data." (See: MNI POLICY: Fed Likely Done Hiking, Focused On Length Of Hold)