Fed’s Daly Says ‘We’re A Long Way’ From Raising Interest Rates
As the US economy continues to rebound from the pandemic-induced recession, interest rates remain at near zero levels, while inflation continues to grow at its fastest pace in more than a decade . This has prompted some economists and policymakers to advocate for raising interest rates to avoid potential overheating of the economy.
But “we are a long way” from raising interest rates, said Mary Daly, chairman of the Federal Reserve in San Francisco, on Wednesday.
Daly acknowledged that “inflation data has been high for longer than expected,” and attributed this to “ongoing disruption due to the pandemic and the delta variant,” she told reporters on Wednesday.
Daly suggested that an interest rate hike in the near future was not appropriate given the uncertainty surrounding the spread of COVID-19, especially given the delta variant.
That said, she seems to agree with Federal Reserve Chairman Jerome Powell, who thinks the end of this year is a reasonable time for the Fed to stop pumping more money into the economy by buying bonds and other assets.
The Fed bought $ 80 billion in bonds and $ 40 billion in mortgage-backed securities each month. Daly said it would probably be too early by the end of this year to completely stop buying assets unless full employment is achieved – which she doubts will be.
“We still have over 6 million people on the sidelines,” she said, referring to the number of people who have not returned to work since the start of the pandemic.
Asked about the recent retirement announcements of Dallas Fed Chairman Robert Kaplan and Boston Fed Chairman Eric Rosengren, following reports that the two made investments while Helping shape monetary policy, Daly said there was “a collective sense of disappointment” that the situation distracted her and her colleagues. their daily work.
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