Mary Daly

And it means not looking just at headline information, but getting below that information, talking to firms, talking to consumers, talking to workers, really on the ground work like we do at the reserve banks and other places.

You know, the Fed is built to do this on the ground work as well as look

the published data.

Well, you know, right now, you know, I'm in the West.

I have the nine states in the western United States.

And it's not just Silicon Valley that seems interested in AI.

No matter who we talk to, whether they're, you know, small businesses, medium or large businesses, manufacturing, tourism, et cetera, they're using AI in a way that they say is going to improve their productivity.

And they're already seeing parts of it.

So when I see that, I'm like, okay, we need to think about that.

What really will spur this as an ongoing thing is if they start to change their business processes.

So that's what I'm looking at.

Now, that means, but I guess a different way to say this, we cannot take our eyes off inflation.

Again, Americans have endured high inflation too long.

That's our mandate.

So while I'm looking for productivity gains and seeing if they're going to continue, I'm also keeping my eye completely focused on inflation to make sure that it doesn't pick up in a way that would suggest we need to do more or we need to hold longer.

You know, I don't think that if you unpack the inflation data, you really see signs of that.

It's true that headline inflation is printing at that level.

But you have to take apart that inflation and ask how much of it is the effect of tariffs passing through the goods prices that we expect to be a one-time price level adjustment and not a consistent run-up in inflation.

And if you unpack the data, what you see is you don't see inflation running up in services or housing.

And importantly, you don't see it spreading into inflation expectations.