Fed's Daly: Low rates raise financial system risks

Eren Sengezer FXStreet

"The Federal Reserve is ready to respond with the full range of policy tools until COVID-19 is behind us," San Francisco Federal Reserve President Mary Daly said on Tuesday, as reported by Reuters.

Additional takeaways

"Public health trajectory is very worrisome."

"Will take ongoing monetary policy support to achieve Fed's goals."

"Hitting or exceeding 2% inflation goal for a few months does not mean victory."

"We need sustained, moderately above-target inflation."

"Full, true recovery will most likely be protracted."

"Low rates raise financial system risks, best addressed by micro and macroprudential tools."

"Fed will need to build tools to further mitigate financial system risk in the coming years."

"Fed also needs further work on climate risk to the financial system, the broader economy."

Market reaction

The US Dollar Index showed no immediate reaction to these remarks and was last seen losing 0.63% on the day at 91.30.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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