(Bloomberg) -- Federal Reserve Bank of San Francisco President Mary Daly said some recent inflation data has been “really good” but the central bank hasn’t yet achieved price stability.
“We’re not there yet,” Daly said Thursday in a moderated conversation in Dallas. “We don’t have price stability right now and we need to be very confident that we’re on a sustainable path to achieve it.”
Daly, who votes on monetary policy this year, reiterated comments from last week that risks to the labor market and price stability are coming into better balance, but the Fed remains committed to its goal of 2% inflation.
“We’re at this point of inflection,” Daly said, “where additional slowing in the labor market could — it’s not a guarantee — but could cause additional increases in the unemployment rate.“
“So we have to keep both mandates in our mind,” she said.
Fed officials have said in recent weeks they are increasingly confident that inflation is on the right track. Most have stopped short of saying when they are likely to lower borrowing costs from a two-decade high, but economists and investors have interpreted their comments as signaling a September move.
“We also have to balance the costs of acting fast and being wrong,” Daly said.
The Fed’s preferred inflation gauge has eased to 2.6%, and the once overheated labor market has cooled to pre-pandemic levels. While officials continue to describe the labor market as strong, they have also said it may be nearing a turning point, with a steady decline in vacancies and a gradual pickup in unemployment.
The San Francisco Fed chief, speaking at a bank funding conference sponsored by the Dallas and Atlanta Feds, was also asked about last year’s regional banking stress and the failure of Silicon Valley Bank and other lenders.
Daly said the 12 reserve banks and the Board of Governors in Washington are working to formalize how the presidents of the regional entities communicate information about financial institutions to their counterparts at the board, which is responsible for setting supervisory policy.
Daly and other regulators came under scrutiny last year following the banking turmoil.
--With assistance from Ali Juell.
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