San Francisco Fed President Mary Daly said she has “everything on the table” for the May FOMC meeting. “If we need to do 50, that is what we’ll do,” she added. “We’re prepared to do whatever it takes to ensure that we get price stability, which clearly no one thinks we have right now.”
Daly pointed to the new dot plot projection that interest rate will rise to 1.9% this year, and 2.8% by the end of next. “Relative to previous periods of tightening, this is quite a bit of front-loading just as the SEP (Summary of Economic Projections) has indicated.”
“I don’t think it’s appropriate to you, you know, really ratchet up so quickly, that we forget about the risks out there, but rather we be data dependent,” she said.
“We could get a lot of tightening in financial conditions globally and that is something we have to think about,” she said. “Some increase in the policy rate above neutral is likely to be required. That’s down the road in 2023. Right now I don’t think we need to be so decisional on what that looks like.”
