The Federal Reserve would be “sensible” to raise interest rates by 50 basis points next month, San Francisco Fed President Mary Daley said today, but stressed that policymakers are determined to reduce inflation.
“I’m starting with the idea that 50 bp would be the logical thing to do in September because I think I’m seeing evidence in the conversations I’m having and the comments people are making that I’m dealing with that are showing me there are some bright spots “, Ms. Daly said in an interview with Reuters.
That said though, “if we see inflation roaring undaunted, with the labor market showing no signs of slowing, then we’re in a different position where a 75 basis point increase might be more appropriate. But I’m going with 50 in my mind as I look at the resulting data,” he added.
It is worth noting that after Daley’s statements, in the futures of the Fed’s interest rates, the possibility of the Bank’s interest rate increase by 50 bp. increased to 55% from 46% before the interview was published.
Mary Daly also said the Fed’s interest rate hike to 3.4% by the end of this year “is a reasonable level to get to,” adding that she did not believe the bank had reached the limit of the rate cap any time soon.
As she clarified, she considers it to be restrictive at the level of 3%.
It is noted that Fed policymakers’ average estimate of the so-called neutral interest rate, the level of which neither stimulates nor constrains economic growth, is 2.5%.
Source: Capital
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