San Francisco Fed President Mary Daly on the Fed’s New Communications Regime

The Federal Reserve is re-evaluating its communication strategy to improve clarity and signal-to-noise ratios, shifting away from the heavy reliance on forward guidance established after the global financial crisis. Mary Daly, President of the Federal Reserve Bank of San Francisco, emphasizes that policy tools must be adapted to specific economic conditions rather than applied reflexively. The discussion distinguishes between demand-driven overheating and supply-side shocks, noting that while traditional wisdom suggests looking through supply shocks, current overlapping pressures—such as energy costs and AI infrastructure build-outs—require a more cautious, data-dependent approach. Furthermore, the integration of AI presents a complex challenge; while it promises long-term productivity gains, its current demand-side impact on chip and infrastructure markets creates significant uncertainty. Policymakers must also prioritize systemic cyber resilience as technology evolves, ensuring the financial sector remains protected against emerging digital threats.