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San Francisco Federal Reserve Bank President Mary Daly said that unless the Iran conflict resolves quickly and the central bank can simply “look through” a temporary increase in oil prices, it is not clear what the next move on interest rates will need to be, Reuters reported on Monday. Key quotes There are at least two possible paths for the economy. Protracted conflict may amplify monetary policy tradeoffs.  Fed needs to stay flexible on monetary policy given risks. Too much forward guidance risks a false sense of certainty. Economy impact would be short-lived if the war resolves quickly. Recognising uncertainty is optimal communication. Policy is in a good place. No single most likely path for monetary policy. We need to remain flexible and respond to evolving risks. Market reaction At the time of writing, the US Dollar Index (DXY) is trading around 99.17, down 0.33% on the day.  Fed FAQs Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback. The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors,…

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Filed under: News - @ March 24, 2026 12:24 am