MNI: Fed's Daly Sees Year-End Taper, 2022 Rate Hike Unlikely

San Francisco Fed President Mary Daly said Wednesday the economy will build the substantial progress needed to scale back asset purchases by the end of this year, while conditions for raising near-zero interest rates will likely remain out of reach through 2022.

Tapering would just be "dialing back on the amount of accommodation we are adding to the economy," and the Fed would still be providing "tremendous support" to the recovery, she told reporters after a speech. Daly is an FOMC voter this year.

Daly is confident the Fed won't raise rates too early, citing recent changes to its policy goals on restoring maximum employment and cementing inflation around 2%. The divide in the latest dot plot on a rate hike next year reflects different views of when those goals will be reached, she said.

"If we should get there in the timeframe of next year, well that would be a tremendous win for the economy. I don't expect that to be the case myself, but if we would get there, then we would be appropriate in responding," Daly said. "If we do not get there, then I'm confident we will continue to accommodate the economy until we fully accomplish our goals."

Inflation "has been coming in high for longer than we expected at the beginning of the year," though the last two reports showed some signs of ebbing supply chain pressures, she said.

The recent controversy around stock trading by top Fed officials shows today's rules aren't enough to maintain public trust, she said. "There is this collective sense of disappointment that this is a distraction," Daly said. "If we don't have the trust of the American people, then our work is harder, and that's not good."