Fed Daly: Expects the economy to continue to slow. That is what the Fed is trying to do.

• Expect growth and labor market to continue to slow
• Expect inflation to come down
• The Fed is very good data dependent
• My views and can it change as the economy does different things
• The CPI coming down is very encouraging, but most is energy costs and in food prices
• Supply disruptions improving his causing inflation to come down
• Core services inflation excluding housing that has shown no sense that it is coming down
• Have not seen core service inflation, down as we would like
• The biggest risk out there is that inflation expectations would start to drift in response to more persistent inflation
• Inflation moving down is most likely not going to happen in the coming year
• We are determined to bring inflation down
• When you see wage growth come down it's consistent with the employment picture slowing
• Still out of balance in labor market
• December wage data was one month of data, can't declare victory
• It is still too soon to declare victory and stop rate hikes

12:44 PM ET: Stocks are dipping on the comments from daily. The S&P is up 39 points at 3934. It was trading around 3940 at the start of her Q&A. The NASDAQ index was up at 10792. It is currently at 10764.

• We don't need to see inflation get a 2% before we stop raising and start to keep rates steady
• This phase of tightening is extremely challenging
• Reasonable/likely for rates to be 5% – 5.25%
• "Meeting by meeting" means we don't want to forecast uncertain decisions
• 50 basis points or 25 basis points are on the table for the next Fed policy meeting
• During rate hikes and gradual steps gives more chance to account for lags
• Not going to wall off a 50 basis point hike as not likely
• When thinking of policy I will be paying a lot of attention to core services ex housing in CPI
• Want to bring inflation down as gently as we can
• Estimate unemployment to rise to 4.5% or 4.6%
• Would be terrific if labor market balancing would come because employers are not looking for more employees
• Would be terrific if the unemployment rate comes up less
• Expect inflation to get into the low 3% by the end of this year and then get closer to 2% by the end of 2024
• To bring inflation down faster would require an enormous labor market pain
• Changing inflation target is not on the table at all

Daly - consistent with some of the other Fed speakers - tapped the brakes that policy easing is any where close. From Daly, to get inflation to 2% quicker would require more pain in the employment sector. She therefore would prefer the course of continued tightening.to ease up to 5% to 5.25% and then see.

The Dow is up 150 points at 33780. The S&P is up 38.41 points at 3933.48. The Nasdaq is up 207 points at 10776. That is lower from when she started to speak but not by much.