The Economic Outlook and Work of the Federal Reserve

Brigitte C. Madrian:

So, Mary, thank you for coming.

Mary C. Daly:

Oh, it’s my pleasure. Totally.

Brigitte C. Madrian:

You noted that this is your first visit to the BYU campus.

Mary C. Daly:

It is. I try to get to all the universities in my district. I have nine states in the Western United States. And so, BYU has long been at the top of my list, but we finally made it happen. And I’m delighted with the warm welcome here.

Brigitte C. Madrian:

So, we’ve checked something off of your bucket list. That’s great.

Mary C. Daly:

It is a bucket list. And you couldn’t have given me a nicer day. I love skiing. I love the mountains. I love Utah. So, here we are. Good weather, and I still see the snow. It was a winning.

Brigitte C. Madrian:

It’s wonderful. I alluded to your background in the introduction. Could you tell us a little bit more about your background and how did growing up in a small town in Missouri shape your worldview and how does it influence your leadership of the Federal Reserve Bank of San Francisco?

Mary C. Daly:

Well, thank you for the introduction. And I do have a little bit of a different background than many people expect for a Federal Reserve leader. But one of the things that I take from my experience is that I worked with very dedicated… I grew up with ready, dedicated people, and they were working hard to make their living and move through their life. But even when you work hard sometimes, the economy doesn’t cooperate. And they were resilient. But what I wanted to do when I got into a different situation was find a way to invest in myself so that I could come back and serve the broader public in thinking about what do you do when the economy doesn’t work for people? How do you help everyone have an opportunity to participate? It’s not doing it for them, it’s doing it with them.

And so, I was lucky enough to have a mentor. I dropped out of high school. I didn’t really know that I could even ever go to college. And I didn’t grow up in a community where people regularly went to college. But I had a mentor and she was so good. She said, “Mary, why don’t you get a GED?” And then after I got the GED, she said, “Why don’t you just go to a semester of college?” And I was like, “I don’t know.” So, I applied. I got in, and then it cost $213 and I didn’t have $213. I know it costs more now, but it cost $213. I didn’t have it. So, she wrote me a check for $213 to the Bursar’s office. I took it to the Bursar’s office. And with that simple effort, she changed my entire life. So, I went to college. I got a four-year degree, and I walked out of there saying, I’ve earned a great opportunity. And it came with a great responsibility. And all that in the invocation mentioned service.

And honestly, that’s how I lead. It’s the service to others which lifts you up. It lifts me up. And so, I work on the economy, but wherever you’re working, whatever you choose to do, if you have that first principle of service, it leads you to a place where you can always give and you will always get. So, that’s how I ended up here. The Federal Reserve job was something that I didn’t imagine ever. I didn’t sit in high school. Well, I didn’t go through all with the high school, but I didn’t sit in college or even and think, I’ll go work for the Federal Reserve. But when I went out for job opportunities after we graduate from a PhD, go to a job market, the Fed gave the proposition that I liked the most.

Do research, academic quality research, participate in learning things, being constantly curious, and then take that learning, that curiosity, and use it to make policy that lifts and changes people’s lives and their opportunities. And so, with that, it’s always been a job I’ve loved. And then I was fortunate enough when the job of president became available, I applied and I got it. And the day that I got it, I thought, this is the responsibility that I’ve always wanted, that you have a bigger opportunity to do even more, have a voice for others and lift more people up. So, that’s how I got here. Happy to talk about any of that. But it’s really a story of starts at the base of service. And that’s if you’re curious, you want to learn and you want to give, you’ll have a beautiful life. That’s my main message to you today. I’ll talk about the economy too, but that’s my main message.

Brigitte C. Madrian:

Well, that’s a wonderful message for this audience because as you enter campus, there’s an edifice that has the university motto, which is enter to learn and go forth to serve.

Mary C. Daly:

Oh, I’m going to take a picture of that. I got goosebumps just thinking about that. I did not know that. But I should have come here.

Brigitte C. Madrian:

But there are many different ways to serve others.

Mary C. Daly:

Absolutely.

Brigitte C. Madrian:

And I love the fact that you are in a role and in a position where you can serve people by helping to create economic opportunity that helps them better their lives through employment, and affordable housing and all of those things. I also love that you talked about the importance of an early mentor in your life. And I too have had some amazing professional mentors. And just for all of the students in the room, if there’s one piece of advice I could give you, it would be find a good mentor who can help you as you approach some of those important life decisions.

Mary C. Daly:

And don’t be shy, if I may say. Don’t be shy. I’m sure most of you, not all of you have heard of Janet Yellen, who was the last treasury secretary. So, she’s a dear friend of mine. And way early in the day before I was ever a friend of hers, I was afraid of her a little bit as I admired her so much. My wife went up to her and said, “I want to ask you about the Nobel Prize your husband won.” And I was mortified. I was like, “Oh, my gosh, what’s going to happen to me?” And Janet told my wife, “Nobody doesn’t like to talk about themselves, but enough people ask.” And that was my opening. So, I sidled it up to Janet the next day I saw her and I said, “I’d like to know how you got to where you are.”

And she was my boss at the time because she was president of the San Francisco Fed. But we ended up keeping that relationship. And she’s been one of my dearest mentors, and now he has become a dear friend. And I guess the point I’m trying to make here is that you have to ask because mentors, as the dean said, are so important, but you have to take the initiative sometimes because sometimes people are too… they don’t think you want the help. So, that’s my big advice, get mentors and get many.

Brigitte C. Madrian:

Wonderful advice. Can you tell us a little bit about what the day in the life of a Federal Reserve Bank president is like? And I’m sure that your days are very, very different, but what types of things does someone in your position do?

Mary C. Daly:

So, it is a wonderful job. And the reason it is a wonderful job is that the platform of it, as I said, the first question is, is the foundation of service, serving others. But then you have to have a variety of things that you’re able and willing to do. So, one of the things that I do as most people know, is we have monetary policy. Now, you might wonder even how the Federal Reserve is set up. So, maybe I’ll roll back and start there. So, the Federal Reserve is a very unique system. It is a very cool system. And you’ve got to go all the way back to 1913 when Congress set it up and think this was a very innovative way to do it.

So, we have a board of governors in DC, but they very much didn’t want Washington to be the only decision point, because they wanted representation from around the country. So, they wanted 12 regional reserve banks. And each regional Reserve bank has employees and has a number of employees taking care of the payment system. So, cash and wire transfers, etc all go through the Fed. The supervision of our banks go through the Fed in these 12 reserve banks. And then you have people who help support the monetary policy function to make policy for the dual mandate, full employment for stability. So, we all have presidents in these places. And the presidents are meant to run the bank. So, a third of my job is about running the institution, the 12th district that I am the president of. And that means everything from making sure the employees are engaged, that we have the right skills in the right jobs, that we’re thinking ahead, we’re being entrepreneurial.

One of my team members, when first week I took the job said, how can we be… I started by saying, we’re fiduciary stewards of public funds and public trust. And one of the people raised his hand and said, “Well, we don’t have shareholders, so how can we ensure that we do that well?” And I said, “Oh, that’s a mistake. The American people are our shareholders.” And every single thing we do when we go about making policy, or figure out how big our budgets should be, or how many employees we should have, or the way you have the right skills, should always come through the lens of our job is to do our very best for the American people. So, that’s a big part of my job, is make sure I manage the bank effectively.

A second part of my job is making sure that we’re managing the Federal Reserve system effectively, that that’s running together. We’re collaborating on the service of the American people. Then of course, I go to the FOMC and I’m prepared to make monetary policy, vote on the interest rates so that we can manage the two goals that Congress gave us, inflation, and our price stability and full employment. And then I have the job of collecting information, data, speaking. So, one of the reasons I travel so much is because I’m going to the 12th district, the states in the 12th district, the communities, and I’m learning about the lived experience of people in the economy. So, coming here today is to talk with you, but I already had a CEO Roundtable where I was able to gather information about how do people working in Utah or the whole Intermountain region feel about the economy? What are they doing? How is the uncertainty we hear about on the news? How is it affecting people’s behavior either on the consumer or the business side?

So, we put all of that together and ultimately we make better decisions. And that’s what the day in the life for me is. So, sometimes I’ll be on a trip and I’m doing engagement and I’m doing talks. I’m talking to the media sometimes. Other times I’m at home and home base, I’m going to the branches. I was at our branch today in Salt Lake. If you think about employment, remember we have a branch here in Salt Lake up just up the road or down the road. I’m turned around. But you can choose which part of the road I should be on. But part of it is just going to the branch, making sure my team members in the branches are knowing that we care about them, we’re listening to them, and we have their backs and we have our best work in mind. So, that’s a little bit of a overview of life in the day of a Federal Reserve Bank president, but mostly it’s about trying to uphold the responsibilities that Congress gave us and the American people depend on.

Brigitte C. Madrian:

And could you tell the people in the room, what’s the geographic area covered by the Federal Reserve Bank in San Francisco?

Mary C. Daly:

I love when people ask that question because we have the biggest district. If you go back to 1913, imagine what the population looked like across the country in 1913. Most of the population was east of the Rockies. And so, west of the Rockies, we have the 12th district. Colorado’s in the Kansas City District, but other thing else is with me. So, we have, think of all the Intermountain states. So, Nevada, Idaho, Arizona, Utah, all the coastal states, and then Hawaii and Alaska. So, I have nine states. We have a very diverse, just think of those states, very diverse set of economies, all affected by the national economy, but very diverse in how they would respond.

So, when I think about the job I have, I think of the 12 districts as a microcosm of the whole US economy. So, I can go and collect information from all the states. I was just in Fairbanks, Alaska, and they’re thinking about things a little differently than the Intermountain states are. But we’re all grappling with the same issues of changes in policy that you then have to think about and what does it do to your spending decisions, your investment decisions. So, that’s how we gather the information. And I have a phrase that we like to use because it’s really important. When we are collecting data, these are data. Talking to people are data. It’s the same thing as if you get published data looking backwards, to look forwards, you have to talk to people, you have to know what they’re planning, what are they thinking about doing, not tomorrow, but next month or next year, that really affects us and makes monetary policy better.

Brigitte C. Madrian:

So, what kind of issues came up in your CEO Roundtable this morning?

Mary C. Daly:

So, one of the questions that I ask is, how are you feeling about the economy? And how are you behaving in the economy? And what comes up, and it’s come up regularly. I mean, I know you know this because you’re here in Utah. Utah’s a strong economy, a resilient economy, and I would say a thriving economy. Now, everybody who’s a CEO is thinking about the uncertainty that changes in policy are bringing. And anytime you have a change in administration… and I’ve now worked at the Fed since 1996, I’ve gone through a lot of changes in administrations. Whenever you have a change in administrations, administrations come in and they have a slate of policy objectives that they’d like to accomplish. And they always have a transition state where people are trying to figure out what’s happening. So, this isn’t happening right now. And there’s announcements about tariffs, and there’s announcements about immigration, and there’s announcements about deregulation and tax policy, and all of that is what CEOs are trying to deal with.

So, they’re thinking about that. And they feel a little worried sometimes or uncertain. I would say more than worried is uncertain. Uncertain about, okay, what’s going to come tomorrow? And how do I manage my business? Because businesses really like predictability. And so, when things are uncertain, they feel a little off-kilter. But then the next question I ask is, so what are you doing? And here’s the good news, and this is what sometimes you’ll hear called the hard data, is that businesses are optimistic about their growth path. They’re dealing with the things around them, but they’re also realizing that they’ve got a strong economy in Utah in the entire Intermountain West, that their businesses, they’ve got good demand, and now they’re trying to manage that good demand.

It doesn’t mean that they’re not slowing down a bit. I mean, when you raise the interest rate as we have and have monetary policy tight, the economy’s going to slow. That’s a necessary feature to bring inflation back down to price stability. But businesses are used to dealing with that kind of uncertainty. And I’ve been around enough that I’ve lived through… I was going through this with the dean that I’ve lived through… started in 1996. You can go back and look in history because I know this is before many of your time, but we had an East Asian financial crisis. I’m very aware of the age difference, by the way. So, we had the East Asian financial crisis, and then we had 9/11, dotcom bust, 9/11, we had the global financial crisis, a pandemic, and now we have a set of policy changes.

But what you can look through in all of those things is that people do move through uncertainty. And resiliency moves you through uncertainty well. And what I saw today in the CEO round table is a lot of resiliency, a lot of planning, a lot of agility, a lot of ability to manage with whatever’s in front of them, but overall, walked away with a good feeling that business was still going. And the hard data we’ve been getting in the published data are not a misread of what the underlying momentum is. So, overall, solid growth, solid labor market, inflation starting to edge down, but a little concerned that it might pick back up again, at least temporarily from tariffs.

Brigitte C. Madrian:

So, the last few days have felt dramatic if you’ve been watching the economic news. And you just described all of the major economic events that you’ve seen in your career. Where would you place the last few days relative to some of those other-

Mary C. Daly:

That’s a great question.

Brigitte C. Madrian:

… dramatic events that have happened in the past?

Mary C. Daly:

That’s a great question. So, in economics, we talk about uncertainty about things that we can know, but they’re just uncertain about how they’ll resolve. And then we think about the unknown, the unknown unknowns. And so, when I think about that, that’s the scariest type of uncertainty because you don’t even know how to start thinking about it. So, those two things for me were 9/11, never had a terrorist attack on US soil. Very frightening about what to do next and how we would do things, things close down and the pandemic. And both of those are the unknown unknowns. Like this is the first time it’s happened in a… well, for the pandemic, a hundred years. Economy’s very different. What do you do about the health issues? What do you do about the economy? How do you manage?

The uncertainty that comes with a financial crisis, those are terrible. The uncertainty now, those are things that you do have the tools, techniques, models, history, the communications that you can work through. So, it doesn’t mean it’s easy, but it’s not as worrisome. So, I think in scoring this uncertainty, I put it more in just the economic certainty that comes with when you change administrations and the administrations have an agenda to make some big changes.

And the thing that’s really important is you stay steady in the boat while you think about not what’s happening over the last two days, but the net effect of the slate of changes that any administration wants to take. Because ultimately it’s the net-net that matters. It’s how does the tax policy, the deregulation policy, those are both technically growth-inducing, along with the tariff policy and the immigration policy, which can be depending on how they’re applied, growth-limiting or growth-inducing, you don’t know. So, you want to take that net effect before you make a fast decision. And this is a place where all the uncertainty of the last two days, the thing I will tell you is jumping to a conclusion in a period of such uncertainty is a recipe for making a mistake. So, as a policymaker, I don’t take bets. I look at the data.

Brigitte C. Madrian:

So, how do you think about monetary policy in the context of a rather dramatic change in tariff policy? What’s the relationship?

Mary C. Daly:

Yeah, that’s another great question. And it comes back to if you’re a Federal Reserve official policymaker, we were given two goals by Congress, price stability, full employment. Those goals never change. They’re always the same. So, I always look through the lens of full employment price stability. So, for several years now, more than I’m sure anyone’s comfortable with, more than I’m comfortable with, we have been struggling to achieve the price stability goal. We’ve made a lot of progress because remember, inflation was up at 7%, now it’s closer to 3%. So, that’s still not price stability. We define price stability as 2%. So, when we think about tariffs, it’s what is the impact on full employment and price stability. And so, knowing the scope, magnitude and timing is really essential to knowing the impact on inflation and on growth. If they’re broad, and they’re large and they’re immediate, that’s a different impact than if they’re small in scope, small in magnitude, and slow to roll out.

So, right now, we got more clarity last week, but we don’t have complete clarity because there’s still… this morning we learned that the Secretary of Treasury said 70 countries are already in negotiations. So, I think this is what I heard in the roundtables. I don’t leave it to myself to just go in my office and start calculating. I go out and talk with individuals and I ask, how are businesses thinking about this right now?

And what businesses are doing is they’re in a wait and see approach. They can’t make big decisions. They can imagine on a meeting what they’re going to do if this happens versus that happens. But if you jump to those decisions right now and then the world changes to a different situation, you’ve made an error that’s harder to correct. So, I think this posture that we’re in monetary policy is let’s re-study. We’ve got policy in a very good place right now. We cut the interest rate by a hundred basis points last year. That puts policy at a good place to stay modestly restrictive, keep inflation coming down, but not so restrictive that the economy’s vulnerable. So, with growth good and policy in a good place, we’ve built the time and the ability to just be tread slowly and tread carefully.

Brigitte C. Madrian:

So, for all of you students in the room, I think Mary just gave a really excellent answer to what could be a final exam question in the next week.

Mary C. Daly:

Wow. Okay. If you all get A’s, please send me a note.

Brigitte C. Madrian:

Yeah, absolutely. Okay. This is going to be my last question before we open it up. Two economic innovations that we see in the news a lot these days are artificial intelligence and cryptocurrency. What do you think the long-term impact of these innovations will be on the economy and on the work of the Federal Reserve?

Mary C. Daly:

So, both of these innovations are trying to solve problems. These have been long in the making by the way. If you go back and read, I love to read about things that are interesting. So, I went back and read what was the first instance of AI? When did we first think about it? You have to go back 60 years to really think about these types of things. And when people were talking about it, academics were talking about it, researchers, people thought they were crazy and sidelined them. This would never happen. So, it takes a long time for technologies to arise.

And you think of crypto, that’s a small word that describes a lot of possibilities in people’s minds. But one of the ways I think about it is that they’re trying to think of faster, better, cheaper ways to exchange, where you don’t need to exchange physical papers and things like that. You can just do things digitally and you can do cross-border more easily. You can do instantaneous exchange. You can make fixed assets be more divisible and have liquidity because you can tie them to a crypto asset or a stable coin. So, it’s all about trying to figure out different ways to have mediums of exchange and also to imagine how to do contracting in exchange faster, better, cheaper.

So, those are technologies that will ultimately, of course, be included in the economy and companies will do them. The Federal Reserve is not actively investing in doing them as much as understanding them. We have to understand the world we’re in well in advance of the world we’re in reaching us. And on AI, I think every company now, if you look at the skills postings, are looking for basic abilities in AI. You don’t have to be a prompt engineer or a computer engineer to be able to do things, but before you go out and look for jobs, I would experiment if you haven’t already with some of the tools out there to do this because that’s the best way to learn is you experiment, you see what you can do, and you think about, can I use AI in my job?

And young people are always the earlier adopters of technology, and that’s why you love having younger people come in your organization because it means that people who are older, my age, can learn a lot from all of you. But I think these are two technologies. The AI in particular has the possibility to be completely transformative. And there’s two kinds of… you can go into the continuum. They’re the doomsayers that think we will never work again because AI will do all the work for us. And then there are the enthusiasts who think AI’s going to change the world and in so many ways.

I’m in the middle, but I do know this, no technology in the history of technologies has ever reduced employment. It’s only changed the composition of employment. And any technology we resist ultimately becomes there. So, the best thing to do is learn it, adopt it where you can. It makes smart choices. If 10 years from now we don’t like where crypto or AI has led us, that’s not because of the technologies, it’s because of choices we’ve made. So, be an interested citizen and learn these things better for your career. But it’s also just better to think about how can we shape this? Technologies are tools, we’re the decision makers.

Brigitte C. Madrian:

Very important point. We’re now going to open it up for questions from the audience. We have a mic over here that direction on the east side of the room. If you have a question, we’d invite you to go over to the mic. We’re not going to take hand raising. Go over to the mic.

Mary C. Daly:

Don’t be shy. It requires getting up and going up in front of everybody.

Brigitte C. Madrian:

And we ask you to ask questions that are respectful, relevant to our broader audience, and don’t duplicate things that we’ve already discussed. And it would be great if you could give us your name and tell us who you are before asking your question. And a question ends with a question mark.

Mary C. Daly:

Wow, you are so good at this. A lot of guidance there.

Audience Member 1:

Hi, Mary, thank you first of all for being here. It’s been a pleasure to listen to my name’s Tyler Jennings in the venture investing world. My question’s more curious about how you think about working across the federal districts, and then how you then take and how you build coalition. Because I think everyone here in their career is not going to start and have all the decision making power immediately. Even at your level today, you don’t have final decision making for the most part at the fed level. So, how do you think about coalition building? And then how you as presidents think about how you influence the chair to get your point across and serve your district?

Mary C. Daly:

That’s a super good question on this because the higher up you go, you use power. You might think you have more power. If you’re using your power, you’ve lost the leadership thing. Because influence is your most important. You called it coalition building. I really think of it as influence. And influence comes by having really well-evidenced arguments. You can’t come and just say, “My opinion is this. And if you didn’t like my opinion, I’m going to just say it more loudly.” That’s not influence. Influence is building credibility over time with having good data, good information, a good way of thinking about it.

Also, I found that influence really rises with curiosity because if you’re only in the seat sitting on your hands waiting for the person to finish, so you can say what you think, then you’ve already probably lost the influence component. Because influence is about listening to what others say, reflecting on what the other person said, and then asking, have I changed my mind? Do I see their view? Or do I have a counter argument there that I want to pose in a polite way? And so, when I think about working together across the 12 Reserve banks and also with the board of Governors, I really think about being curious, being confident that I have a view to share, and being humble enough to realize that other people in the room also have really good things to hear. And I come back to this basic belief that we work together, we do better for American people. If we work apart, we do less well. And if your goal is do mission-based work, work for the mission of the Fed, work for the American people, then it’s a natural pull to want to collaborate.

So, I would say that if you start off in your career, start practicing the art of influence and the art of influence is being willing to study, being willing to do the homework, know your information, go raise your hand, but not all the time. If you want to just constantly speak to be heard, as opposed to be listened to. Then when you want to speak to be listened to, speak less. Want to speak to be heard, speak a lot. So, I think lot gets you little influence, a little gets you a lot of influence. So, those are my ideas. But we have a great system. I will say the Federal Reserve has been a terrific place to work. And it’s one of the reasons I’ve stayed, because I’ve got earnest people working hard with curiosity, confidence and humility all wrapped together. And we work well together. We believe fundamentally in the collaboration brings better results.

Brigitte C. Madrian:

Thank you. Next question.

Audience Member 2:

Hello, President Daly. Thank you for coming. My name is Max Workman. My question for you is from the perspective of the Federal Reserve, what are some of the most important advantages and disadvantages of operating with a fiat currency?

Mary C. Daly:

Wow. Okay. Fiat currency, you got to go all the way back to that. I think the main reason that countries… let’s go back to the gold standard. When you’re marking it to an asset that moves in value itself, you find it hard to control the mediums of exchange. And a great medium of exchange is one that can expand as the nation expands and doesn’t move around with a commodity price. Because that’s a volatility that ultimately doesn’t serve countries well. So, I’d say that’s the main advantage. And I don’t really see, even with the emergence of digital assets and digital currencies, that’s not to challenge the fiat currency. They’re backed by sovereigns. That’s to change how we execute on exchanging the fiat.

Brigitte C. Madrian:

Next question.

Audience Member 3:

Thank you so much, President Daly, for everything you said already. I was just curious. My friend shared a quote with me this weekend. It was from the creator of the iPod. He said that constraint breeds innovation. And you talked about certain times in your career, the global financial crisis, dotcom bubble or even COVID that were times of uncertainty. Do you feel like you have a time during your presidency or do you have a tool or an idea or innovation that you’re proud of you’d like to talk about?

Mary C. Daly:

I believe that quote. We talked about it this morning in the CEO round table. We termed it this way, that times of constraint are forcing functions. They force you to be creative, to think hard and to imagine how you can do things differently often to achieve getting around a constraint. But it just makes you better. It just makes you think harder. So, I’ve had many times in my career where we’ve been constrained. I mean, whether you think about the financial crisis and then the pandemic, those are two big events that really impacted the economy. And in the financial crisis, we were working hard to do two things at once. And the Fed was not popular after the financial crisis. Not popular at all. Central banking’s hardly ever popular. If you want to be a popular person, don’t pick central banking. But I’m not worried about popularity, I’m worried about service.

But seriously in that we weren’t very popular, but yet we have to go and talk to people who have a lot of critical things to say. So, it’s a different constraint than you might’ve been thinking about. I’m not inventing an iPod, but I am inventing the idea of how do you communicate to your critics? And what the Fed did, what I was very much part of, is we went out into the communities all over, and met with people who were very concerned, worried. I probably gave more talks after the financial crisis, and I was an economist in the research department, than at any point in my career, because really it was about we need to go out. Now, that started, it changed how we thought of engagement at the Fed. We’ve always been engaged, but it really helped us solidify how important collecting data from individuals because you’re hearing their concerns. And then we use that same practice when we had the high inflation.

And then in the pandemic. So many of us, and I’m sure you all had to deal with this here, you go from everybody’s in-person, to no one’s in-person. And that constraint led to the innovations of how do we work with each other on all the technologies we use? It doesn’t matter which one. I won’t market any particular technology, but the video technologies. But we also learned that many more people can do many more things virtually. And I think that taking that with us forward, while we recognize that there’s no… I don’t really think there’s any replacement for being in-person. This is so much fun to me. I hope you’re having a good time. But I have so much fun meeting people, being with people.

But I do use that virtual option all the time because my reach, I have nine states, my reach is so much larger now that we’ve learned how to use that. So, I’m very proud of that things we’re bringing from the pandemic. I’m also very proud of this in the Fed. When people are critical of us, we go outside, not inside. And I think that’s our obligation. It’s a responsibility.

Brigitte C. Madrian:

Thank you. Next question.

Audience Member 4:

Hi, I’m Andrew Ziegenhorn. Just a related question, but obviously your career span like probably the most active the Fed has ever been in its history. I’m curious, what are some things that you’ve learned through times of major crisis, both personally and economically?

Mary C. Daly:

Yeah, so from the economy’s perspective, I’ve learned that communication is essential to making good policy. So, we know that from an academic perspective. Chairman Bernanke innovated a lot on communication. So, the Fed used to be more of a secretive group where you would barely know what they were doing. And then Greenspan, Chairman Greenspan, who I also knew… I worked under many chairmen. So, I worked under Chairman Greenspan. And his view was, if you knew what I said, I said too much. Seriously. And then Chairman Bernanke comes in and he says, well, if the public knows what we’re trying to do, then they can help us do it.

So, in the financial crisis, Chairman Bernanke, he goes out and he starts talking. He’s the first sitting chair to be on 60 Minutes. And his main messages were, “We understand this is painful. We are working on your behalf. Here’s what we’re going to do. We’re going to make sure that we can help support the economy. We’re going to make sure that we can restart the engine of growth and make sure that we can bring employment back.” And that communication has really influenced me, and I’ve learned it, and I try to do it through the pandemic, doing it in the period of high inflation and doing it now in the period of uncertainty. There’s no substitute for us being out there, learning where people are feeling challenges and communicating our resolute this to achieve our goals, to do what Congress gave us, and to tell people that we’re on it. It’s about the trust part.

Personally, I’ve learned that the American economy and the American people are incredibly resilient. I mean, incredibly resilient. And what you then have to do in my job and in my world is just give opportunities for that resilience to thrive, clear out the barriers that prevent people from taking their resilience and turning it into action. But it’s amazing. We came out of the pandemic. We were overachieving on growth, the labor market, all these other things. And we had higher inflation because of bottlenecks and all those other things. But just literally, if you go back and look, it is unbelievable how well we did as an economy.

So, that’s the main thing. You’re going to go through all these times in your life where you’re going to think, because you’re young, many of you, most of you actually, you’re going to say, “Oh, this is the worst time we’ll ever see.” That’s hardly ever true, just I’m telling you. But you’re also going to realize that the worst time doesn’t seem that bad on the other side of it, because you’re like, “Oh, we got through that. I’m resilient. I’m okay. And I learned a lot of personal lessons that have made me better at doing the future.”

Brigitte C. Madrian:

Next question.

Audience Member 5:

Thank you so much for everything you’ve said today and for joining us. My name is Rebecca Larger, and you mentioned earlier about having a mentor earlier in your life. And mentorship and sponsorship is just absolutely vital for the professional development of young adults, especially women. My question for you is what recommendations would you make for young adults wondering how to find a good mentor?

Mary C. Daly:

Well, first of all, there’s many ways to do that. So, I have found mentors and been a mentor in many different ways. I just went to a conference one time and I was giving a talk, and a young woman asked a question, and afterwards she came up to me and she said, “If I had another question, would you be okay if I emailed you?” And I said, “Here’s my cell phone.” And now I know her parents and her parents called me more than she does now because she’s in graduate school, and her parents are always checking on her. But she’s at Stanford Graduate school. She was my research assistant. I wrote a paper with her. And it all started because she was brave enough at this conference so many years ago in St. Louis when she was an undergraduate at the University of Kentucky, to raise her hand and ask a question and come up afterwards to get my personal cell phone.

So, I think that’s a way to do it. You see someone who you think you might learn from, and you go up and ask them questions. And then the second way is you know people in your life, you’re going to meet people at work and things, and you don’t have to construct a formal mentoring relationship. A lot of these times, you don’t have to say, “Will you be my mentor? Will you be my sponsor?” It’s just you see the person and you ask questions. “How did you navigate this? How’d you do this?” It always helps in my judgment, if you’ve already watched the person behave in a way that you admire and you want to learn about, and then you go and you have a conversation about, “How did you know how to do that?”

Also, and this is something we don’t like to do as humans, if you’re having a tough problem, you got to go ask for somebody to help you. And that’s another form of mentorship or sponsorship. And what I found in those situations, if you start there, other things just blossom. And I don’t know how I found Betsy, my very first mentor. A friend, after I dropped out of high school, my guidance counselor connected me to her, Betsy, I still keep in touch with her. And Betsy just started talking to me. And a year later, I had a GED and I was going to college, and it just evolved. So, that’s my advice to you. Don’t be shy and don’t have to create the end relationship. Just start with the little things, and one step at a time, and you’ll find it like me. You’ll get to an age and you’ll say, “Look, all these wonderful people who have helped me.”

Brigitte C. Madrian:

Thank you. That was a great answer. Last question.

Audience Member 6:

Okay, no pressure. I’m Hudson Vogel. Appreciate you being here. My question surrounds how I think there’s a lot of uncertainty, obviously you’ve mentioned with some of the short-term policies of managing your dual mandate of stable employment or maximum employment, stable prices. How do you balance accomplishing those short-term goals with some of maybe these broader long-term goals that transcend just whoever’s in office right now?

Mary C. Daly:

Sure. So, one of the things that I also learn if you’re a monetary policymaker is we work with the economy we have, and we work toward the economy we want. And so, the economy we have is an economy that has, we are naturally built to be… I would call it in the short and medium term because we have an interest rate. That’s our only tool. We’re already working with one tool, the interest rate, and two goals, full employment and price stability. So, that’s a big job just there. And so, it’s naturally going to pull you to thinking about the short and medium run.

But we are all thinking about the longer run. And one of the reasons in the feds, in the regional feds and that the Board of Governors, you will see research departments looking far ahead about what will changes in labor supply do to potential growth? What will AI do to the allocation of jobs? What do changes in weather do to the allocation of activity or the price of insurance? How does stable coins and other things affect the environment we’re in? So, we’re all looking ahead, but we don’t have a lot of tools to influence that, other than asking a lot of questions and convening conferences and other things to get people talking about the opportunities out there.

So, we ultimately, by keeping prices stable and job market full, we are setting the conditions for all the things that ultimately can be done. And so, that’s how we think about it. So, I think a lot about the longer term goals as a citizen of our nation. I think about the short and medium term goals as a monetary policymaker. Thanks for the question.

Brigitte C. Madrian:

Thank you. Well, this has gone fast.

Mary C. Daly:

It has gone fast.

Brigitte C. Madrian:

It’s been a delightful conversation. We’ve had lots of wonderful questions-

Mary C. Daly:

Wonderful questions.

Brigitte C. Madrian:

… from the audience. Can you all join me in giving Mary a…

Mary C. Daly:

Thank you.

Brigitte C. Madrian:

Thank you.

Mary C. Daly:

Thank you.