Daly: Fed Should Handle Rate Hike Patiently

San Francisco Fed President Mary Daly called for the Federal Reserve to be patient regarding interest rate hikes despite high inflation.

In a speech before the Commonwealth Club of California, Daly said that patience is the boldest and best action and that it would be better to wait for more clarity on the economy and inflation data than it would be to raise interest rates pre-emptively.

Raising rates now would not fix high levels of inflation, Daly indicated, rather, it would limit demand and slow the US economic recovery.

Daly said that there is good reason to think that inflation will not last beyond the pandemic conditions and that over the next several quarters, the central bank will see if inflation easing and discouraged workers return to the labour force.

Once the Fed has a clearer signal as to the state of the economy, Daly suggested, the central bank would be ready to act on interest hike.