Episode Overview
Podcast: Bloomberg Talks
Episode Title: Fed's Mary Daly Talks Inflation, Monetary Policy
Date: November 10, 2025
Guest: Mary Daly, President of the Federal Reserve Bank of San Francisco
Host: Bloomberg Interviewer
In this episode, Mary Daly discusses the Federal Reserve’s current stance on inflation, productivity, and monetary policy. She debates whether today’s environment more closely resembles the inflationary 1970s, the productivity-driven 1990s, or something entirely new. Daly addresses criticisms of the Fed, the challenges of interpreting labor market data, and the role of technology and asset prices in shaping US economic policy.
Key Discussion Points & Insights
Framing the Current Economic Environment
[00:22–01:37]
- Main Question: Are we in a 1970s-style inflationary scenario, the productivity boom of the 1990s, or something else?
- Daly says both inflation and productivity are key focuses. Inflation in goods is contained while inflation expectations remain anchored.
- Productivity is rising, even as the labor market slows, likely due to firms “doing more with less.”
- The recent 50 basis point rate adjustment helps the labor market but keeps policy restrictive to tame inflation.
Quote:
“If you look at inflation, you're seeing that it's been pretty contained... Inflation expectations remain very well anchored.”
— Mary Daly [00:53]
1970s vs. 1990s: The Historical Analogy
[01:37–04:32]
- 1970s Parallel: Persistent inflation would require prolonged restrictive policy.
- 1990s Parallel: Rising productivity could allow for longer economic expansion without sparking inflation, as during the Greenspan era.
- Daly is monitoring both direct survey data from firms using AI and input from employers regarding pricing to gauge which path we're following.
- She emphasizes uncertainty, advocating for an "open mind" as new data emerges.
Quote:
“We can't know ex ante... We just have to have an open mind about which one it could be and maybe other periods of history.”
— Mary Daly [02:52]
Neutral Rate and Policy Responses
[04:32–05:36]
- If the risk is 1970s-style inflation, the Fed would need to “hold policy tighter for longer.”
- If productivity is the main driver (like the 1990s), the economy could run “a little bit longer” before rates rise.
- Daly stresses the importance of talking directly to companies/workers rather than just relying on headline data.
Focus on Inflation and Productivity
[05:36–06:36]
- Daly describes promising but early signs that AI is boosting productivity even in non-tech sectors.
- She's “keeping [her] eye completely focused on inflation” despite enthusiasm for productivity gains.
Quote:
“While I'm looking for productivity gains... I'm also keeping my eye completely focused on inflation to make sure that it doesn't pick up.”
— Mary Daly [05:15]
Criticism of the Fed: Has It Taken Its Eye Off Inflation?
[06:36–07:00]
- Daly disputes the notion that the Fed is ignoring inflation, noting that underlying trends (excluding tariff-impacted goods) are stable, and wage pressure is moderating.
- She warns against over-tightening and potentially “injur[ing] the economy.”
Labor Market Dynamics: Demand or Supply Shock?
[07:00–08:04]
- Massive slowdown in payroll growth is observed. Daly sees evidence of a negative demand shock rather than just supply constraints.
- Wage growth is slowing even in sectors with higher immigration, indicating reduced employer demand.
Quote:
“If it was simply about supply... you would find wages going up... But that's not what you see. So to me, that's a demand shock.”
— Mary Daly [07:23]
Asset Price Inflation and Productivity
[08:04–09:34]
- On concerns about asset bubbles, Daly says financial conditions are only one input. She focuses more on underlying productivity potential of technologies like AI.
- She argues that, regardless of the “transformative vs. business as usual” tech debate, both views expect productivity gains.
Monetary Policy Transmission Effectiveness
[09:34–10:53]
- Daly refutes the claim that monetary policy is ineffective.
- She points to rapid rates pass-through to areas like mortgages and slower inflation as evidence that policy adjustments do work—though with lags.
Quote:
“This argument that we've somehow lost our power... I simply don't see it in the information.”
— Mary Daly [10:00]
Working Without Government Data
[10:53–12:10]
- Daly discusses how the Fed relies on both government data and private surveys.
- She values “on the ground” intelligence—“go[ing] to the parking lots of your favorite retail stores... airports are full”—as critical during economic inflection points.
Fed Division and Debate
[12:10–13:26]
- Daly denies unusual division within the FOMC, framing it as healthy debate rather than discord.
- She argues that such differences are strongest at inflection points in the economy, benefiting decision-making.
Quote:
“It's a misnomer to think people always agree... Debate... is really healthy in a debate about making policy in an uncertain time with no truth.”
— Mary Daly [12:28]
Memorable Moments & Notable Quotes
- “You lost workers, but you lost jobs at the same time... We're definitely in a low firing, low hiring period.” — Mary Daly [07:30]
- “Everybody agrees on one thing, it will change productivity at the same time.” — Mary Daly on AI [09:32]
- “You can go to a sporting event or a concert... What you see is an economy that is slower than it was... but they're still out there participating.” — Mary Daly [11:24]
- “I see that [debate] as a strength of the committee...” — Mary Daly [12:38]
Important Timestamps
- 00:53 — Daly outlines current inflation and productivity trends
- 01:43–03:02 — Daly contrasts 1970s vs. 1990s policy implications
- 05:15 — Daly underscores vigilance on inflation despite tech optimism
- 07:23 — Insight into what payrolls/wage data reveal about labor market dynamics
- 09:34 — On monetary policy’s transmission and asset prices
- 11:24 — Value of non-traditional economic observation (retail, airports)
- 12:28 — The nature and value of internal Fed debates
Tone & Language
Throughout, Daly speaks with calm confidence and a data-driven, slightly conversational style, emphasizing caution, the importance of “open-mindedness,” and the need for continuous, ground-level observation and debate.
Summary
This episode provides valuable insights into how the Fed balances inflation and productivity signals at a time of historical uncertainty. Mary Daly presents a nuanced view between historical parallels, highlights the ongoing need for data-driven and qualitative inputs, and offers reassurance that policy debates within the Fed are a necessary strength.