UPDATE 1-Fed’s Daly: Inflation will moderate, uncertainty requires us to wait

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Nov 10 (Businesshala) – San Francisco Federal Reserve Bank Chair Mary Daly said on Wednesday she expects high inflation to moderate once COVID-19 subsides, and reiterated whether to raise rates or limit the Fed’s momentum. Accelerating would be “quite premature”. Bond-buying taper.

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“The uncertainty requires us to wait and watch with caution,” Daly said in an interview on Businesshala TV.

In a nod to the economic progress made since the first COVID-19 vaccinations were introduced late last year, the Fed last week began trimming its monthly bond purchases in a tapering process that is expected by the middle of next year. .

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Any interest rate hikes are expected to begin after bond-buying ends, with a small majority of Fed policymakers believing they should begin no earlier than 2023, as of September.

That time frame has been criticized for some quarters for potentially putting the US central bank behind the curve to fight inflation.

US consumer prices rose 6.2% in October from a year earlier, the fastest annual rate in 31 years, a government report showed earlier in the day.

This is high inflation, Daly said, and is painful, but it is being driven by supply-chain bottlenecks and high consumer demand for goods that will fade as COVID-19 fades. Similarly, labor supply is disrupted due to COVID-19 fear and impact.

Fed monetary policy may not affect supply-side issues, Daly said, and if it tightens policy now that could actually raise the cost of investment and actually make slow progress in addressing bottleneck issues. could. (Reporting by Ann Sapphir, Editing by Nick Ziminsky and Alistair Bell)

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