San Francisco Fed Pres. Daly: Monetary policy is restrictive. Progress isn’t victory.

San Francisco Fed Pres. Mary Daly is speaking and says:

  • Monetary policy is restrictive.
  • Progress isn’t victory, must remain resolute
  • To ensure we fully achieve goals, we need to finish the work.
  • We need vigilance and agility.
  • The economy still has considerable momentum.
  • We are a long way from 2% inflation and a long way from sustainable employment.
  • Even with recent slowing in the labor market, job growth remains well above what needed to keep pace with growth.
  • It’s possible the slowing so far it will translate into steady march towards goal
  • There are real risks in inflation projection.
  • Will need to see progress on a super – core inflation to be confident we are on path to 2%.
  • If continue to see labor market and inflation calling we can hold rates steady
  • If financial conditions remain tight, that reduces need for more action from fed
  • But if calling inflation stalls or financial conditions loosen, will need to raise rates further
  • Need to keep an open mind, have optionality on rates
  • With rising bond yields, the need to do additional tightening by Fed is not there

Looking at yields:

  • 2 year yield 5.02% -3 basis points
  • 5 year yield 4.678% -4.3 basis points
  • 10 year yield 4.712% -2.3 basis points
  • 30 year yield 4.876% -0.1 basis points

This article was written by Greg Michalowski at Source