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MNI BRIEF: Daly Says Fed's Rate Remains Below Neutral

(MNI) Ottawa
(MNI)

San Francisco Fed president says a deep recession is unlikely.

The Federal Reserve's key lending rate remains below a short-run neutral level that's probably about 3% today, San Francisco President Mary Daly said Wednesday.

“We’re not even up to neutral right now,” she said on a Twitter talk with Reuters, saying the short-run neutral rate is different from the FOMC's views on the long-run rate around 2.5%. Further hikes needed to pull down inflation aren't necessarily restrictive, she said, adding that the pace of the September move depends on new economic data. The June SEP showing about another 100bps of hikes by year-end remains a reasonable view, she said.

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The Federal Reserve's key lending rate remains below a short-run neutral level that's probably about 3% today, San Francisco President Mary Daly said Wednesday.

“We’re not even up to neutral right now,” she said on a Twitter talk with Reuters, saying the short-run neutral rate is different from the FOMC's views on the long-run rate around 2.5%. Further hikes needed to pull down inflation aren't necessarily restrictive, she said, adding that the pace of the September move depends on new economic data. The June SEP showing about another 100bps of hikes by year-end remains a reasonable view, she said.

Keep reading...Show less