Federal Reserve's Daly prepares for high inflation ahead of CPI data release.

Federal Reserve official Daly stated that the U.S. already had work to do to combat inflation before the oil price shock, and now that work is simply taking longer. If the Iranian conflict is resolved quickly and oil prices fall, a rate cut is "not impossible"; however, if inflation remains higher than expected for an extended period, the Fed will remain on the sidelines until it is confident the inflation problem has been resolved. She believes the likelihood of a rate hike is lower than a rate cut or maintaining the current rate. Daly pointed out that persistently high oil prices will mean higher inflation, but will also affect economic growth. She has already seen higher prices transmitted into the economy, with people reducing travel due to concerns about rising costs. However, she emphasized that there is no fundamental price increase at present, and it is necessary to observe how the conflict develops and how businesses pass on the price increases. She pointed out that the real question is whether the ceasefire can be sustained; if it can, then the CPI data is irrelevant; high inflation data itself will not surprise anyone. She stressed that reducing the inflation rate to 2% is crucial, but doing so at the expense of employment would plunge households into hardship. Currently, the risks to the Fed achieving its full employment and inflation targets are roughly balanced. (Jinshi)