Bloomberg Talks Fed's Mary Daly Talks Inflation, Monetary Policy
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Nov 10, 2025 
Mary Daly, the President of the Federal Reserve Bank of San Francisco, dives deep into inflation and productivity. She warns that maintaining high interest rates too long could echo past mistakes from the 1970s. Daly discusses the potential of AI to drive productivity growth, showing optimistic trends across various firms. She emphasizes the importance of monitoring firms' pricing intentions to gauge inflation pressures. With a focus on the labor market, she details how recent changes indicate demand shifts and examines how monetary policy still functions effectively despite perceptions to the contrary.
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Dual Focus: Inflation And Productivity
- Mary Daly watches both inflation and productivity to guide policy decisions.
- She sees contained goods inflation and rising productivity alongside slowing labor markets.
AI's Early Productivity Signals
- Daly probes firms on how AI affects their bottom line and productivity.
- Early responses are encouraging but firms say it's still too early to judge full effects.
Policy Depends On Inflation Versus Productivity
- If inflation risks re-accelerate, policy must stay tighter for longer to restore 2% inflation.
- If productivity gains dominate, the economy may run stronger without tighter policy.