San Francisco Fed chief Daly not set on December rate hike
By Alexander Bueso
Date: Tuesday 13 Nov 2018
(Sharecast News) - A top US central bank official said on Monday that the Federal Reserve would likely need to raise interest rates again at the end of the year, followed by at least two more hikes in 2019.
In her first interview since taking the helm at the Federal Reserve bank of San Francisco, Mary Daly reportedly told Bloomberg: "It wouldn't be surprising to me that we would need to go up again in December and at least a couple of times next year."
Daly was speaking late in the US trading session, just after 1900 GMT, and her remarks would appear to place her towards the more dovish 'end' of the spectrum in terms of Fed officials' expectations for further policy tightening.
However, she reportedly later clarified that she was not "set" on a move in December, saying that two to three hikes would be appropriate over the forthcoming "period of time", although the exact timing remained to be seen.
Also in remarks to Bloomberg, Daly described the US jobs market as "hot" and "robust" while cautioning that normalising policy in a manner that created a 'soft landing' "is a challenging issue".
"I don't feel worried about inflation, I'm actually relieved that it's come back to target, and I'm feeling optimistic that it will remain at target," she said.
The Fed official also said she would be studying the economy's reaction to rate hikes while watching out for 'shocks' to the economy.
She also expressed uncertainty about where short-term rates would be headed once the so-called 'neutral' level was reached.
Speaking of which, her so-called 'modal' forecast for the neutral level for the Fed funds rate was between 2.5% to 2.8%, which was a tad below the 3.0% median estimate envisaged by her peers, - at least up until recently.
Nevertheless, the recent correction in equity markets did not bother her.
"There was a broad consensus across policy makers, but also market participants, that valuations were higher than could be supported," she told Bloomberg.
"So then a correction is something that I would view as a positive."
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