SFFed President Daly
- Fed can move away from ultra easy monetary policy without derailing the US economy expansion
- she fully supports the initial benchmark interest rate hike at the Fed's next meeting in March
- it is clear that the inflation rate is high and the labor market is strong, so we do need to act
- the gradual further rate hikes depend on the data
- I do absolutely expect the policy rate to rise over the course of the year, but by how much and how quickly and during what meetings – those things and going to leave open
- I have no sense that her policy adjustments will derail the basic fundamentals of a strong labor market
- I don't want to pronounce today what I think we will do at each and every meeting for the rest of 2022
- on the balance sheet she thought the Fed would start to run off its balance sheet earlier than in the last cycle and at a faster clip
- it is likely that the Fed can push inflation all the way back to 2% by the end of the year as supply chain bottlenecks don't seem to be recovering and the supply workers will continue to lag
- we want to see downward movement inflation
- expects the slow down from omicron to be short lived
- the goal of the Fed rate hike will be to achieve a soft landing for the economy
- sustainable growth rate was likely in a range of 1.8% – 2%. The economy grew at 5.7% in 2021
- Even 4-5 rate hike would still mean that the Fed policy would remain below neutral level 2.5%
- I do not see a lot of indication that we are behind the curve
- I don't see evidence the labor market is overheated
- The waves of Delta and omicron variant of coronavirus have cause imbalances that ultimately pushed up inflation
Daly is the president of the San Francisco Fed.