Fed’s Daly flags two economic paths as Middle East risks cloud policy outlook

Reinforces a “data and event-dependent” Fed stance. Oil-driven inflation risks skew outcomes toward higher-for-longer rates, while a quick de-escalation could keep policy on hold with limited urgency to ease. Daly signalled the Fed is navigating a highly uncertain outlook driven by geopolitical risks, with policy likely to remain flexible rather than guided by a fixed path.Summary:Daly outlines two… Daly signalled the Fed is navigating a highly uncertain outlook driven by geopolitical risks, with policy likely to remain flexible rather than guided by a fixed path. Daly signalled the Fed is navigating a highly uncertain outlook driven by geopolitical risks, with policy likely to remain flexible rather than guided by a fixed path. Summary: Daly outlines two scenarios tied to Middle East conflict trajectory Quick resolution → energy spike seen as temporary, policy can look through it Prolonged conflict → risks of higher inflation, weaker growth, softer labour market Fed faces sharper trade-offs between inflation and… For traders, releases like this can quickly shift rate expectations, currency direction, index futures and broad risk sentiment. Watch the next move in the dollar, front-end yields and index futures to see whether the market prices this release as a true surprise or only a passing headline.