MNI POLICY: Fed's Daly Says QE Program 'In Good Place'

San Francisco Federal Reserve President Mary Daly said Tuesday that while offering more guidance on QE would be the next natural step for monetary policy, the recent rise in Covid cases doesn't justify aggressive economic stimulus when people are being encouraged to stay home instead of going out to spend.

Daly told reporters she wouldn't "front-run" what the FOMC will decide at its next meeting, and that financial markets have a good understanding of the Fed's policy stance.

"I judge policy as in a good place," she told reporters after a speech. "I see no indications that they are misunderstanding where we are headed, and that we need to somehow do something different to get financial markets where we need them to be," she said.

Asked about speeding up the pace of QE or changing the duration of assets being purchased, she said one key issue is when to shift gears from bridging people across the pandemic to stimulating a strong recovery "and we are not there yet," she said.

"Coronavirus cases are surging, we are having to go back into our homes for safety and health of ourselves and others," she said. "It is not the time to stimulate the economy aggressively and get people out into the economy, because that would be unsafe."

Daly hasn't shifted her earlier projection for a "grinding" recovery until a vaccine is widely available. "The vaccine news is positive, that's for sure, but positive news that we have indications that a vaccine is possible isn't the same as news that the economy has a vaccine right now," she said.

"We came out in September with the forward guidance on the funds rate, the next natural step would be to provide additional forward guidance on our asset purchases," she said. "I won't front-run our further deliberations."