Fed's Daly: With rise in yields, no need for additional tightening
05.10.2023, 16:47

Fed's Daly: With rise in yields, no need for additional tightening

With the recent rise in US Treasury bond yields, the need to do additional tightening by the Federal Reserve is not there, San Francisco Federal Reserve President Mary Daly said while speaking at the Economic Club of New York on Thursday.

Key quotes

"The economy still has considerable momentum."

"We are a long way from 2% inflation, and a long way from sustainable employment."

"Even with recent slowing in labor market, job growth remains well above what's needed to keep pace with growth."

"It's possible the slowing so far will translate into a steady march toward goals."

"There are real risks in inflation projections."

Will need to see progress on super-core inflation to be confident we are on path to 2%."

"If we continue to see labor market and inflation cooling, we can hold rates steady."

"If financial conditions remain tight, that reduces the need for more action from the Fed. But if cooling in inflation stalls or financial conditions loosen, will need to raise rates further."

"Need to keep an open mind, have optionality on rates."

"I don't see dysfunction in the markets right now."

"Markets have a better sense now, I think, about the Fed's reaction function - that we want to get inflation down to 2%."

"We are not in a wage-price spiral."

"Short-run inflation expectations have come down, and that releases wage pressure."

Market reaction

The US Dollar (USD) stays under modest bearish pressure in the American session. As of writing, the USD Index was down 0.3% on the day at 106.45.

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