Before CPI Data Release, Fed's Daly Vaccinates Against High Inflation

BlockBeats News, April 10th - Federal Reserve official Daly said that before the oil price shock, the United States itself had work to do to address inflation, and now this work just takes longer. If the Iran conflict is resolved quickly and oil prices fall, a rate cut is "not out of the question"; but if inflation remains higher than expected for a longer period, the Fed will remain patient until it is confident that the inflation issue has been resolved. She believes that the possibility of a rate hike is lower than that of a rate cut or maintaining the current rate. Daly pointed out that persistently high oil prices would mean rising inflation but would also affect economic growth. She has already seen higher prices being passed on to the economy, with people reducing travel due to cost concerns.

However, she emphasized that the current situation is not about fundamental price increases. She believes it is necessary to observe how the conflict will develop and how businesses will pass on the price increases. She noted that the real issue is whether the ceasefire can be sustained; if it can, then CPI data becomes irrelevant, and high inflation data itself will not surprise anyone. She stressed that lowering the inflation rate to 2% is crucial, but doing so at the expense of employment would put families in a difficult situation. Currently, the Fed faces a fundamentally balanced risk in achieving its goals of full employment and inflation targeting. (FXStreet)