Fed’s Daly looks to mid-2022 for more clarity on jobs, inflation

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FILE PHOTO: Mary Daly, President of the Federal Reserve Bank of San Francisco, after delivering a speech on the US economic outlook in Idaho Falls, Idaho, US November 12, 2018. Businesshala/en Sapphir./File photo
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(Businesshala) – San Francisco Federal Reserve Bank President Mary Daly said on Tuesday that it would be mid-2022 before there was clarity on the real state of the labor market and the outlook for inflation, meanwhile urging policy patience.

“It’s going to take time to know” whether the job market is tight, as many employers say, or there is room to expand by bringing people back into the workforce, Daly said at the National Association of Business Economists virtual meeting.

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With a large amount of uncertainty surrounding the state of the labor market, and with COVID-19 still the main culprit behind the ongoing rise in inflation, the best thing to do for now is to remain “steady in the boat” and remain vigilant. , he said.

While it is their expectation that when the pandemic will subside, so will inflation, there is a lot of uncertainty.

“Let’s be patient” and wait to see if inflation eases when the pandemic hits, as she expects, adding that supply chain disruptions could push prices up into next year.

“I’m looking at the summer of 2022 when we need – knock on wood, no more types, no more delta bounce – to get some clarity,” she said. He said that it will also take about six months for the situation in the labor market to become clear.

Meanwhile, it could be a “challenging time” as consumers have to pay more for gas and food and other necessities, she said. If the Fed raises interest rates too soon, it will do little to bring down prices but “absolutely” reduce the pace of job gains.

“It’s too high a risk to take when we have no indication that these are consistent trends today,” she said.

Reporting by Ann Saffir, Editing by Nick Ziminsky and Chris Reese

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