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San Francisco Fed President Mary Daly believes that when it comes to lowering interest rates, patience is key.
“Policy is in a good place,” Daly said. “It’s having influence. We just need to be more patient to see what we can do at the Fed. The economy and the situation looks brighter than it did a year ago. Still, there is a lot of work to do from all of us…The golden chalice is not out yet. We do not declare victory.”
Daly made the remarks during a fireside chat at the San Diego County Economic Roundtable on Friday afternoon.
While market observers are hopeful interest rates might be lowered during the upcoming Federal Open Market Committee meeting in March, Daly seemed to tap the brakes on that optimism.
“We raise interest rates to get supply back in balance,” Daly said. “We raise interest rates and demand slows…This will bring inflation down. We just have to stick with it.”
While the goal of the Fed is to lower inflation rates to 2%, she said it is going to take more time. With inflation currently at 3.9% there is a lot of work to be done.
“We need to deliver on low inflation, but we have to do it without taking away good jobs,” she said. “We don’t want to get to 2% so quickly that we damage the economy elsewhere.”
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