Mary Daly is head of the San Francisco Federal Reserve branch.
Headlines via Reuters from remarks prepared for delivery to Boise State University in Idaho.
- "Navigating the economy toward a more sustainable path necessitates higher interest rates and a downshift in the pace of economic activity and the labor market"
- "But for now, inducing a deep recession does not seem warranted by conditions, nor is it necessary to achieve our goals."
- Fed cannot take well-anchored inflation expectations for granted
- many risks to a soft landing for the economy - ongoing COVID battles, the war in Ukraine, a recession ahead for Europe, and central banks globally tightening policy
- persistent supply chain issues, "robust" consumer spending, and a strong labor market marked by low 3.7% unemployment, "narrow the path for a smooth landing ... but they do not close it
- Fed will need to pay close attention to the economic data so it doesn't do either too much or too little
- "History tells us that the costs of errors are high"
The 'deep' recession qualifier is a worry. The Fed has already made an error - this'll be confirmed when the data show the US economy has contracted (recession).