Daly's full endorsement of the Fed's decision to hold rates steady, combined with her cautious but data dependent framing ahead of September, suggests markets should not read her earlier comments on fading tariff effects and a potential Middle East resolution as signalling imminent easing. Her explicit warning that the Fed would act aggressively if inflation momentum appears to be building keeps a hawkish tail risk firmly on the table, which could limit how far rate cut expectations are priced in the near term. Her comment on businesses having limited pricing power to pass on higher costs offers some support to the view that current price pressures may prove less persistent, a dynamic that could ease bond market concerns if borne out in upcoming data. With three officials already dissenting in favour of hikes last week, Daly's remarks reinforce a genuinely split committee heading into September, keeping rate path uncertainty elevated for traders.Earlier:Fed's Daly says tariff impact on inflation beginning to fadeFed's Cook: Fed running out of room for disnflation to returnDaly says the Fed was right to hold rates steady but is watching closely for any sign inflation momentum is rebuilding before September's meeting.Summary:Fed's Mary Daly says she was completely supportive of last week's decision to hold interest rates steadyShe says the Fed needs to collect more data before the September meeting to determine whether current inflation reflects fading supply shocks or a more persistent trendDaly says the Fed should stay vigilant but be prepared to act if needed, and would respond aggressively if inflation momentum appeared to be building againShe noted businesses currently have limited pricing power and will struggle to pass on higher input costs to consumersDaly said consumers are highly focused on oil prices when thinking about inflation, and an end to the Middle East war should reduce that contribution to price pressuresThe FOMC voted last week to hold the federal funds rate steady at 3.5% to 3.75%, with three officials dissenting in favour of a hike, while several other Fed officials have since argued for openness to raising ratesFederal Reserve Bank of San Francisco President Mary Daly said Wednesday she was "completely supportive" of the central bank's decision last week to hold interest rates steady, even as inflation remains well above the Fed's 2% target, arguing policymakers still need more information before deciding on their next move.Speaking at an economics conference in Tokyo, Daly said the Fed has "a lot of information we need to collect" ahead of its September policy meeting to determine whether current inflation reflects supply shocks that will fade over time, or whether a longer lasting inflationary trend is taking hold. She said the central bank should remain "vigilant to watch the information as it comes in, but be very prepared to take action" if the data warrants it.The Federal Open Market Committee voted last week to hold its federal funds rate target steady in a range of 3.5% to 3.75%, amid ongoing concern over elevated price pressures. Three officials dissented in favour of a rate hike, citing the persistently high level of inflation, and in the days since, several other Fed officials have argued the central bank needs to remain open to raising rates, or should move to lift short-term borrowing costs to bring inflation back toward target.Daly acknowledged concern about how the public might react to another period of renewed inflation, and said that if it became apparent inflation momentum was building again, the Fed may need to respond more aggressively to bring price pressures back down to target. Her comments underline that while she supports the current wait and see approach, she is not ruling out a more forceful response if conditions deteriorate.At the same time, Daly said there are "good reasons" to believe the supply driven shocks that have affected the US economy will not have a lasting impact on inflation. She pointed to businesses currently having limited pricing power, meaning many companies are struggling to pass higher input costs on to consumers, a dynamic that could help contain broader price pressures. She also noted that consumers remain highly focused on oil prices when forming their views on inflation, and suggested that an end to the war in the Middle East should help reduce that particular source of price pressure going forward.Daly's remarks add further texture to her earlier comments this week, in which she said tariffs have had a clear impact on inflation but that this effect is beginning to fade, and that technology investment tied to artificial intelligence is currently helping to push inflation higher. Taken together, her comments this week paint a picture of a Fed official who supports patience for now, while keeping open the possibility of more decisive action should the balance of these competing inflation forces shift in the wrong direction. This article was written by Eamonn Sheridan at investinglive.com.