San Francisco Fed Chief Supports Gradual Rate Rises
12 November 2018 - 7:59PM
Dow Jones News
By Michael S. Derby
San Francisco Fed President Mary Daly said Monday the likely
path of the U.S. economy calls for more interest-rate rises.
The economy's current state is "very good," she said, adding
that the Fed is doing well in achieving its job and inflation
goals. "These conditions, with both of the Fed's goals essentially
met, merit the gradual normalization of monetary policy," Ms. Daly
said in the text of a speech to be presented in Idaho.
Ms. Daly, who took office in early October and participated in
her first vote at last week's interest-rate-setting Federal Open
Market Committee meeting last week, sees the outlook for interest
rates as intertwined with how the economy performs.
"I view this gradualism as a process of iterated learning,
guided by incoming data," she said, explaining "we take a policy
action, wait, learn about the economy's response, and repeat," Ms.
Daly said. "The FOMC is not on autopilot, with quarterly rate
increases locked in. We're constantly looking at the data and
adjusting the monetary policy path as needed in response," she
said.
When the Fed met last week, it left its short-term interest-rate
target range unchanged at between 2% and 2.25%. While it offered
little new guidance about the outlook then, the Fed is broadly
expected to boost rates again in December and to follow through
with more increases next year. Fed officials say they are raising
rates to help keep the economy in balance and moving forward at a
time of strong job growth and inflation returning to desired levels
after a long period of weakness.
In her comments since taking over the top job at the Federal
Reserve Bank of San Francisco, after serving as its research
director, Ms. Daly has indicated she is on board with her
colleagues' outlook.
In her prepared remarks, Ms. Daly was upbeat about the economy,
which has "significant underlying economic momentum," with boosts
from stimulative government fiscal policies and global growth.
She said the job market is "booming," adding that recent
unemployment numbers "strongly suggest that the labor market has
reached or exceeded full employment."
The return of inflation to the Fed's 2% target is "very
encouraging," she said. "I expect this modest up trend to continue,
with inflation rising to just a bit above 2% over the next year or
so," Ms. Daly said.
Write to Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
November 12, 2018 14:44 ET (19:44 GMT)
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