Comments from Daly in New York:
- Fed funds rate is our most powerful tool
- Doesn't see negative rates being on the table in US now
- Says that in her view the Fed is 'really far away' from going to negative rates
- Labor market is very strong
- Fed is keeping an eye on nonfinancial corporate leverage for signs of risk
- Decisive action from the Fed succeeded in calming money markets
- Determining the level of reserves that are needed in financial system has been a learning process
- Economy is in a good place and that Fed would make an adjustment to monetary policy if outlook becomes substantially different
- Says she is worried consumer expectations will fall at some point if we don't deliver on 2% target
- The new role of central banks is to fight inflation from below the target not above the target
- She has been thinking about whether we need average inflation targeting over the business cycle
I don't believe the Fed will stop with those tools when the next recession rolls around.
