San Francisco Fed President: "Fed Should Be Cautious with Rate Hikes... Concerned About Backlash"

Mary Daly, President of the Federal Reserve Bank of San Francisco, USA
[Photo by Reuters]

[Asia Economy Reporter Cho Hyun-ui] Mary Daly, President of the Federal Reserve Bank of San Francisco, said in a CBS interview on the 13th (local time), "The most important thing in raising interest rates is to be cautious and data-driven according to our pace."

Daly's remarks expressed skepticism about expectations that the Federal Reserve (Fed) will raise interest rates by 0.5 percentage points at once to curb the worst inflation in 40 years.

President Daly said, "It is clear that some easing measures need to be removed," but added, "Historically, sudden and aggressive measures can have destabilizing effects on the growth and price stability we aim to achieve."

He said, "I prefer an approach of raising the benchmark interest rate at the March Federal Open Market Committee (FOMC) regular meeting, observing and evaluating the impact, and then implementing the next rate hike at the optimal time."

Regarding the timing of the second rate hike, he said, "It could be the next (FOMC) meeting or the one after that."

The Fed, which has taken a strong stance against inflation, is reducing asset purchases and preparing for interest rate hikes. In January, the U.S. Consumer Price Index (CPI) surged 7.5%, the largest increase since 1982. Market participants expect the Fed to raise interest rates at the March meeting.

CNBC reported, "Daly's remarks came after James Bullard, President of the St. Louis Fed, emphasized the need for a 1 percentage point rate hike by July on the 10th." Bullard is considered a hawkish figure within the Fed.

Regarding how many times interest rates will be raised this year, Daly said, "It is too early to predict," adding, "There are reports on employment, job reports, and inflation before the March meeting. All are important."

The Producer Price Index (PPI) and FOMC minutes, to be released on the 15th and 16th respectively, are also expected to be data that will influence the Fed's interest rate hike trajectory.

This content was produced with the assistance of AI translation services.