April 8 (Reuters) - San Francisco Federal Reserve President Mary Daly on Wednesday said the U.S. economy is fundamentally in a "good place" despite sharply higher oil prices from the Iran war and the uncertainty over how long the war will last.

"What we've seen is consumers are still spending, businesses are still investing," Daly told the St. George Area Chamber of Commerce in Utah. "There's a concern that maybe this will push inflation up: that's our job, we'll focus on that. And there's a concern that maybe the labor market isn't as solid, but we're not seeing that, we're seeing it kind of settle at a good place." 

A deal struck Tuesday for a two-week ceasefire in Iran raised hopes for a prolonged settlement and sent oil prices dropping. Traders who had begun pricing in the prospect of a Fed rate hike to battle an oil-shock-induced bout of inflation again began pricing in the possibility of a rate cut this year.

Daly did not appear ready to bank on any of that. Her view that the labor market is stable suggests no hurry to ease policy, and her promise to focus the Fed's energy on controlling inflation appeared to lean in the opposite direction. She did not speak directly to her view on the appropriate rate path.

"I see the underlying fundamentals of the economy as really in a good place," Daly said. "The question is what's going to happen with the war? How long will prices of oil and gas stay elevated and what will ...the knock-on effects be in terms of other goods and services?"

She said that it was too early to know those answers because they depend on how long the conflict lasts.

"Importantly, we do know that the underlying fundamentals of the economy remain solid and those are things that are important to how we see inflation progressing over time and how we see the labor market progressing," Daly said.