MNI POLICY: Daly: Fed Stimulus in Place Until Recovery Near

By Greg Quinn

     WASHINGTON (MNI) - San Francisco Fed President Mary Daly said Monday

aggressive monetary stimulus will remain in place until the economic recovery

regains most of the losses inflicted by Covid-19, and in the near term policy

makers may need to deliver even more relief.

     "I expect our current stance of highly accommodative monetary policy to

continue until the economy has largely recovered what's been lost due to the

virus," she said in the text of a speech to the National Press Club in

Washington. "And with the current low inflation environment expected to

continue, we can once again search for the upside potential of our full

employment goal."

     "The virus, and how quickly we are able to manage it, will determine the

length of the bridge we need to build" while fighting the virus, she said.

"We'll need to be flexible and responsive as the situation evolves -- and

prepared to do more, if more is needed."

     --JOBS LESSON

     Policy makers must remember the lesson following 2008 recession when the

economy moved into a record expansion that saw the job market continue drawing

in less-skilled workers without boosting inflation, Daly said. That suggests

more fiscal action to build worker skills and digital connectivity is needed, to

overcome the current recession where "many of the recent job losses are likely

to be permanent."

     "Monetary policy can't help the U.S. economy reach its full potential on

its own. We also need fiscal policymakers to commit to sustained investments,"

Daly said.

     Low interest rates make it easier to afford such spending, she said in a

speech titled "We Can't Afford Not To."

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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