Svmuu News Federal Reserve official Daly stated that even before the oil price shock, the United States itself had work to do in combating inflation, and now this work simply requires more time. If the Iran conflict is resolved quickly and oil prices fall, rate cuts are "not impossible"; however, if inflation remains persistently above expectations for an extended period, the Fed will maintain a wait-and-see approach until confident the inflation issue has been resolved. She believes the likelihood of raising interest rates is lower than that of cutting or keeping rates unchanged. Daly pointed out that persistently high oil prices would mean higher inflation but would also impact economic growth. She has already seen higher prices being transmitted into the economy, with people reducing travel due to concerns about rising costs.
However, she emphasized that the current situation does not represent a fundamental price increase, and it is necessary to observe how the conflict will develop and how businesses will pass on price increases. She noted that the real issue lies in whether the ceasefire can be sustained; if it can, then the CPI data becomes irrelevant; high inflation data itself would not surprise anyone. She stressed that bringing inflation down to 2% is crucial, but doing so at the expense of employment would put households in a difficult position. Currently, the risks to the Fed achieving its full employment and inflation goals are roughly balanced. (Jin10)