San Francisco Fed President Daly warned on Wednesday that the central bank's credibility would be at risk if it prematurely declares victory in the fight against inflation and then has to raise interest rates again.
Daley told the Financial Times that recent economic data showing a further slowdown in inflation was "very, very encouraging" and suggested the Fed's policies were working.
Daly said the Fed should "think carefully, be patient, and not rush to judgment or make statements." "We have to be bold enough to say, 'We don't know,' and bold enough to say, 'We need to take the time to do it right,'" she said.
"My concern is that if we don't have enough information to determine whether we are actually in the tightening process to bring inflation back to 2%, we will have to stop and go," she said. She was referring to the result when the Fed said it was done with tightening monetary policy, but then had to suddenly change course.
The Fed has kept its benchmark policy rate at a 22-year high of 5.25-5.5% since July and appears poised to keep that level steady at its final meeting of the year.
Daly said the risks of tightening monetary policy too much (causing unnecessary economic pain and job losses) are roughly balanced against doing too little (allowing inflation to stabilize at higher levels).
She said she paid little attention to the sharp decline in U.S. Treasury yields in recent days, which has led to easier financial conditions. Before the bond market rebound, Fed officials had said that if high yields persisted, they could offset the need for further Fed rate hikes.
Daly, who will be a voting member of the Federal Open Market Committee (FOMC) next year, was asked about plans to cut interest rates next year. The question of the “normalization” of interest rates after a “strict” period.
When weighing monetary policy, Daly said she would use inflation expectations one year out and actual economic performance as yardsticks. She added that a rate cut "isn't going to happen in the short term."
#BTC #xrp #etf #tia
Daley told the Financial Times that recent economic data showing a further slowdown in inflation was "very, very encouraging" and suggested the Fed's policies were working.
Daly said the Fed should "think carefully, be patient, and not rush to judgment or make statements." "We have to be bold enough to say, 'We don't know,' and bold enough to say, 'We need to take the time to do it right,'" she said.
"My concern is that if we don't have enough information to determine whether we are actually in the tightening process to bring inflation back to 2%, we will have to stop and go," she said. She was referring to the result when the Fed said it was done with tightening monetary policy, but then had to suddenly change course.
The Fed has kept its benchmark policy rate at a 22-year high of 5.25-5.5% since July and appears poised to keep that level steady at its final meeting of the year.
Daly said the risks of tightening monetary policy too much (causing unnecessary economic pain and job losses) are roughly balanced against doing too little (allowing inflation to stabilize at higher levels).
She said she paid little attention to the sharp decline in U.S. Treasury yields in recent days, which has led to easier financial conditions. Before the bond market rebound, Fed officials had said that if high yields persisted, they could offset the need for further Fed rate hikes.
Daly, who will be a voting member of the Federal Open Market Committee (FOMC) next year, was asked about plans to cut interest rates next year. The question of the “normalization” of interest rates after a “strict” period.
When weighing monetary policy, Daly said she would use inflation expectations one year out and actual economic performance as yardsticks. She added that a rate cut "isn't going to happen in the short term."
#BTC #xrp #etf #tia
