Fed's Daly: Case for a 50 bps rate hike in May is now “complete”, can also make announcement on balance sheet
San Francisco Fed President and FOMC member Mary Daly on Wednesday said that the case for a 50 bps rate hike in May is now "complete" and that the Fed can also make an announcement on the reduction of its balance sheet at the next meeting, reported Reuters.
Daly said that since the March meeting, she had seen new evidence that the economic expansion in the US is self-sustaining. Raising interest rates to 2.5% this year is not abrupt or surprising, she noted, and there is broad understanding that it is appropriate.
The Fed expects US economic growth to slow below trend, but not tip into recession, and even if it did, it would be mild and short, she noted. Moreover, Daly said that its premature to decide on how restrictive policy may need to get and the Fed will need to evaluate inflation and supply chains.
Finally, Daly called the US labour market "frothy".
Author
Joel Frank
Independent Analyst
Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018, specialising in the coverage of how developments in the global economy impact financial asset
