Fed's Daly Warns Delta Variant Poses Threat To Global Recovery (FT)

"A top Federal Reserve official has warned the spread of the Delta coronavirus variant and low vaccination rates in some parts of the world poses a threat to the global recovery as she urged caution in removing monetary support for the US economy. "I think one of the biggest risks to our global growth going forward is that we prematurely declare victory on Covid," Mary Daly, the president of the Federal Reserve Bank of San Francisco, said in an interview with the Financial Times. "We are not through the pandemic, we are getting through the pandemic.""

• She added: "What you've seen is an increasing sense of the downside risk to the global economy."
• "Chair [Jay] Powell said this so clearly in his press conference and I think that's the light to follow here," Daly said. "That's the message I keep saying: we're fully committed to our framework. That means eliminating shortfalls in employment and delivering average inflation of 2 per cent, and that is still absolutely paramount."
• "We're ready to taper at the appropriate time," she said. "Then I'd like to see, how is that going? How does the economy respond to that? Because we can forecast, we can project, but we need to know in order to actually say, 'oh, OK, now it's time to move on to the next phase', which is discussing policy normalisation and the fed funds rate coming up a bit."
• "Daly said the split among Fed officials on how quickly to remove support for the economy, which was revealed in the minutes, was healthy as officials brought their "different perspectives" to the table and were not operating in an "echo chamber". For her part, the San Francisco Fed president indicated she is not quite ready to move to a post-pandemic environment. "I think there's always this excitement that 'Oh my gosh: look, the vaccinations are working, this could be the end'. But it would be premature to say that we've achieved a victory here.""
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