Fed’s Daly Says Must See, Not Just Expect, Substantial Progress on U.S. Economy
(Bloomberg) -- Federal Reserve Bank of San Francisco President Mary Daly said she’s “bullish” on the rebound of the U.S. economy, but there is still a long way before the recovery is complete and will wait for the data to show it.
“We said substantial further progress, we have to see it, we don’t have to expect it, we have to see it,” Daly said during an interview on Bloomberg television with Kathleen Hays. “You still see real pockets of weakness, real pockets of concern.”
Fed officials have repeatedly stressed that the U.S. economy continues to need aggressive monetary policy support as it recovers from the pandemic, even as the outlook brightens amid widening vaccinations.
Daly said she expects a small inflation pick-up this year, but this will prove transitory and doesn’t see broader inflationary pressures building. She said low interest rates are supporting the economy’s recovery and not, right now, creating excessive risks.
“Right now I see a financial system that is very liquid, is very accommodative and is supporting the economy in the way we need,” she said. “I see overall the financial system in a good place.”
Chair Jerome Powell said Thursday that there were nine or 10 million fewer Americans now working compared with February 2020 before the pandemic struck.
“We will not forget those people and we’ll provide the economy the support that it needs until that job is done,” he said.
Minutes of the Fed’s March meeting released Wednesday said policy makers expect it will likely be “some time until substantial further progress” was made on employment and inflation. That refers to the tests they’ve set for scaling back bond purchases of $120 billion a month.
Their latest forecasts show officials don’t expect to raise interest rates from near zero before the end of 2023, even as they sharply upgraded projections for growth and employment this year.
“I’m bullish on the rebound, but I know we have a long way to go before the job is complete,” said Daly.
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