Daly Says Fed Should Hike Rates Expeditiously to Neutral by Year-End
2022.04.20 19:46
© Bloomberg. Mary Daly, president of the Federal Reserve Bank of San Francisco, speaks during a Bloomberg Television interview in San Francisco, California, U.S., on Wednesday, Nov. 13, 2019. Daly said that monetary is in a good place given healthy momentum in the economy and consumer spending, despite headwinds from weaker business investment and manufacturing.
(Bloomberg) — U.S. central bankers should move expeditiously and raise interest rates to neutral — the level which neither speeds up or slows down the economy — by the end of the year, Federal Reserve Bank of San Francisco President Mary Daly said.
“I see an expeditious march to neutral by the end of the year as a prudent path,” Daly said Wednesday in a speech in Las Vegas, noting that most forecasters see that level lying around 2.5%. “Moving purposefully to a more neutral stance that does not stimulate the economy is the top priority.”
The Fed began raising rates from near zero at its March meeting, with a 25 basis point increase. Several policy makers, including Daly, have said they are open to hiking by 50 basis points next month if needed to curb the hottest inflation in four decades.
Daly, speaking at an economic conference hosted by the University of Nevada, Las Vegas, said in her prepared remarks that the Fed should evaluate the effects of its policy tightening once it reaches neutral, as the coronavirus as well as Russia’s invasion of Ukraine pose many risks to the economic outlook.
Daly’s comments echo those of several other policy makers, who have similarly called for the central bank to raise rates expeditiously to get to neutral, which officials estimated at 2.4% when they updated forecasts last month.
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