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Fed’s Daly: Biased toward running economy hot, given low inflation and uncertainty over full employment
While speaking at the Reserve Bank of New Zealand (RBNZ)/International Monetary Fund (IMF) conference in New Zealand, the Federal Reserve Bank of San Francisco’s President Marcy C. Daly conveyed worries about the economy, monetary policy.
Key quotes
- 'Biased' toward running economy hot, given low inflation, uncertainty over 'full employment'.
- Persistently undershooting Fed's 2% goal is worrisome.
- 'Make-up' strategy on meeting inflation goal could help counter inflation under-runs.
- 'Hot' US labor market disproportionately benefits disadvantaged groups.
- Overly tight labor market could encourage decisions that could harm long-term economic growth.
- Corporate debt doesn't pose 'acute' financial stability risk, but watching closely.
- Fed may want to consider countercylical capital buffer if financial vulnerabilites increase.
- We are going to need fiscal and monetary policy to work together.
FX implications
Comments like these generally have a little market impact unless carrying any direct strong challenges to the Fed’s present monetary policy.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
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