<p>San Francisco Fed President Mary Daly is out with some candid comments today. She's plugged into the core of the Fed and was the first to signal a higher path for Fed rates in November 2021. Her latest comments skew hawkishly but it's conditional on the final round of data before the March 22 FOMC decision.</p><ul><li>I am beginning to think the labor market has a shortage of workers</li><li>Anecdotes from business leaders suggest inflation is slowing more than recent data suggests</li><li>Inflation is still high, have to think about 'continuous tightening'</li><li>It would be a mistake to say we've done all we can do, impact of policy is still ahead</li><li>Further policy tightening, maintained for a longer term, will likely be necessary</li><li>Reshoring and the continued decline in labor force participation could mean more inflationary pressures ahead</li><li>The disinflation momentum we need is far from certain</li></ul><p>Between this and <a href="https://ift.tt/knWPsbH" target="_blank" rel="follow">Waller</a>, it looks like the Fed is setting up a shift in the dots to 6% or just below. There is certainly plenty of grey area and it's contingent on the data between now and March 22 but it's a fine line. Obviously, the market wasn't spooked by Waller so I don't see that changing on Daly but Powell is speaking on Wednesday and if he strikes some of these notes, the market could take notice.</p> This article was written by Adam Button at www.forexlive.com.

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