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Daly Economic Letter On Policy Nimbleness

FED
  • The SF Fed has published an economic letter expanding on Daly’s remarks from Jun 24.
  • “For a number of reasons, I expect our economic transition now to look more like the mid-1990s [when the Fed hiked 300bps in roughly a year but the economy and labor market maintained a relatively strong expansion through the end of the decade] than like the 1970’s Great Inflation and subsequent painful disinflation.”
  • “The fact that financial conditions [see chart] and real activity are adjusting to expected monetary policy tightening, even when actual rates have not fully risen, means that long and variable lags may not be as long, or variable, as typically assumed.”

More: https://www.frbsf.org/economic-research/publications/economic-letter/2022/june/policy-nimbleness-through-forward-guidance-speech/

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