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.
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