San Francisco Federal Reserve President Mary Daly expressed on Sunday that the Central bank should take a measured approach to increase interest rates.
Daly said, “It is obvious that we need to pull some of the accommodation out of the economy. But history tells us with Fed policy, that abrupt and aggressive action can actually have a destabilizing effect on the very growth and price stability we’re trying to achieve. The most important thing is to be measured in our pace and, importantly, data-dependent.”
The Federal Reserve is tapering off its asset purchases during pandemic and it is preparing to raise interest rates to curb increasing inflation.
Market participants are also anticipating Fed to start its first-rate increase at its policy meeting in March policy.
Daly said, “What I would favor is moving in March and then watching, measuring, being very careful about what we see ahead of us — and then taking the next interest rate increase when it seems the best place to do that. And that could be in the next meeting or it could be a meeting away.”