U.S. central bankers should move expeditiously and raise interest rates to neutral — the level which neither speeds up or slows down the economy — by the end of the year, Federal Reserve Bank of San Francisco President Mary Daly said.
“I see an expeditious march to neutral by the end of the year as a prudent path,” Daly said Wednesday in a speech in Las Vegas, noting that most forecasters see that level lying around 2.5%. “Moving purposefully to a more neutral stance that does not stimulate the economy is the top priority.”
The Fed began raising rates from near zero at its March meeting, with a 25 basis point increase. Several policy makers,
Daly, speaking at an economic conference hosted by the University of Nevada, Las Vegas, said in her prepared remarks that the Fed should evaluate the effects of its policy tightening once it reaches neutral, as the coronavirus as well as Russia’s invasion of Ukraine pose many risks to the economic outlook.
Daly’s comments echo those of several other policymakers, who have similarly called for the central bank to raise rates expeditiously to get to neutral, which officials estimated at 2.4% when they updated forecasts last month.
