Fed’s Daly supporters for a ‘measured’ approach as rate climb anticipations increase

Key takeaways: 

• The Federal Reserve should be measured in its way to raising interest rates, San Francisco Fed President Mary Daly told Sunday.
• “History informs us with Fed policy, that abrupt and aggressive action can have a destabilizing impact on the very expansion and cost stability we’re trying to reach,” Daly stated.
• Daly supports the Fed raising rates in March and told “it’s too early to call” how many times the central bank will climb rates this year.

Advocates of Fed Daly for a measured approach: 

The Federal Reserve should be measured in its way to raising interest rates, San Francisco Fed President Mary Daly stated on Sunday.

“It is clear that we ought to pull some of the accommodation out of the economy. But history tells us with Fed policy, that abrupt and aggressive action can have a destabilizing effect on the very development and cost stability we’re trying to achieve,” Daly stated on CBS’ “Face The Nation.”

“The most substantial thing is to be measured in our pace and, notably, data-dependent,” Daly added.

The Fed is tapering off its pandemic-era investment buys and preparing to climb interest rates to fight inflation. The U.S. consumer cost index rose 7.5% over the previous year in January, the most rapid pace since 1982.

Market participants hope the central bank creates its first-rate climb at its March policy meeting.

“What I would favor is moving in March and then watching, measuring, being very mindful regarding what we see forward of us — and then taking the next interest rate growth when it appears the best place to do that. And that could be in the next meeting, or it could be a meeting away,” Daly stated.

Daly’s comments reached after St. Louis Fed President James Bullard on Thursday called for increasing interest rates by a whole percentage point by the beginning of July, fueling a solid jump in bond yields that day.