Fed's Daly Backs Steady Rates, Warns of Aggressive Action If Needed
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Fazen Markets Editorial Desk
Collective editorial team · methodology
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Federal Reserve Bank of San Francisco President Mary Daly stated on Wednesday, August 6, 2026, that she was "completely supportive" of the Federal Open Market Committee's decision last week to hold the federal funds rate steady in a range of 3.5% to 3.75%. Daly argued the central bank needs more data before its September meeting but explicitly warned it would act aggressively if inflation momentum appears to be rebuilding. Her remarks, delivered at a conference in Tokyo, reinforce a deeply split committee, with three officials having already dissented in favor of a rate hike last week. The uncertainty she underscores is reflected in market movements, with the NEAR token trading at $1.70, down 0.61% over 24 hours, as of 03:21 UTC today.
The Fed's decision to hold rates steady last week came after a prolonged period of elevated inflation that has consistently run above the central bank's 2% target. The last time the FOMC faced a similar internal split with three dissents was in September 2022, when policymakers were also grappling with persistently high inflation and debated the speed of tightening. The current macro backdrop features inflation readings that have moderated from their peaks but remain stubborn, with core measures still elevated enough to concern several committee members.
The immediate catalyst for Daly's detailed remarks is the upcoming September FOMC meeting, which will provide several more weeks of crucial economic data. Officials are specifically looking to determine if recent price pressures are the fading echoes of past supply shocks or signs of a more persistent trend. This period of data dependency creates a high-stakes waiting game for markets, as the balance of forces within the committee appears nearly evenly split between patience and further immediate action.
The current federal funds target range of 3.5% to 3.75% represents a plateau after a historically rapid series of hikes that began in early 2022. Three FOMC members dissented against holding at this level, advocating for an immediate increase, highlighting the depth of the policy divide. Market-implied probabilities for the September meeting, as reflected in futures pricing, show considerable uncertainty, with traders assigning only moderate odds to either a hike or a continued pause.
In related markets, the cryptocurrency NEAR is trading at $1.70 with a 24-hour trading volume of $97.91 million, reflecting a decline of 0.61%. Its market capitalization stands at $2.22 billion. This price action in a risk-sensitive asset mirrors the broader market's cautious stance amid elevated monetary policy uncertainty. The lack of a clear directional signal from the Fed is keeping volatility in check for the moment but suppressing strong bullish momentum across speculative assets.
| Metric | Level | Change (24h) |
|---|---|---|
| NEAR Price | $1.70 | -0.61% |
| NEAR Market Cap | $2.22B | - |
| Fed Funds Rate (Upper Bound) | 3.75% | Held Steady |
Daly's warning of aggressive action if inflation reignites serves as a direct ceiling on near-term rate cut expectations. This hawkish tail risk is likely to keep short-term Treasury yields anchored or prone to upward pressure, particularly in the two-year tenor, which is most sensitive to Fed policy expectations. Sectors with high sensitivity to interest rates, such as real estate (ticker: VNQ) and technology growth stocks, may see limited multiple expansion until this uncertainty is resolved, as their valuations are heavily discounted from future earnings.
Conversely, Daly's observation that businesses have limited pricing power offers a counterbalancing dovish signal for bond markets. If upcoming data confirms that firms cannot pass on costs, it would support the view that inflation is less persistent, potentially easing pressure on longer-dated Treasury yields. A key risk to this view is that consumer inflation expectations, which Daly noted are highly focused on oil prices, could become unmoored if energy prices spike again due to geopolitical events.
Positioning data suggests asset managers have been cautiously adding to duration in recent weeks, anticipating a peak in the rate cycle. However, hedge funds and other leveraged accounts have maintained short positions in interest rate futures, betting on further hawkish surprises. This divergence in positioning sets the stage for significant market moves when the next major data point, such as the Consumer Price Index report, is released.
The next major catalyst is the release of the July Consumer Price Index report on August 14, 2026. This data will provide the first major post-FOMC-meeting snapshot of inflation trends and will be critical for shaping the debate ahead of September. Following that, the Jackson Hole Economic Symposium, scheduled for late August, will be closely watched for policy signals from Chair Powell and other senior officials.
For rates markets, the key level to watch is the 4.00% yield on the 2-year Treasury note; a sustained break above this level would signal markets are pricing in a high probability of a September hike. In equities, the S&P 500's ability to hold above its 50-day moving average will be a test of whether the current earnings season can outweigh lingering monetary policy concerns. For more analysis on how monetary policy intersects with equity valuations, visit our macro research hub at https://fazen.markets/en.
A dissent signals strong disagreement within the committee about the appropriate policy path. Three dissents in favor of hikes, as seen last week, indicate a substantial minority believes current policy is not restrictive enough to curb inflation. Historically, such splits often precede a policy shift if the data validates the dissenting view, but they do not guarantee an immediate change. The presence of dissent increases uncertainty and makes the committee's forward guidance less predictable for markets.
When businesses struggle to pass higher input costs to consumers, it acts as a natural brake on broad-based inflation. This dynamic suggests that even if certain commodity prices rise, the second-round effects on core services inflation may be contained. It supports the "transitory" inflation narrative that some Fed officials, including Daly, have referenced. However, this effect can be overwhelmed by strong labor markets and rising wage pressures, which give consumers the capacity to absorb price increases.
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