In a recent address at The Economic Club of New York, San Francisco Federal Reserve Bank President, Mary Daly, suggested that the benchmark lending rate might remain stable if current labor market and inflation cooling trends persist or if financial conditions continue to stay tight. This comes after a period of 19 months where the rate saw an increase of over five percentage points.
Daly drew parallels between the recent bond market tightening and a rate hike, implying that similar economic effects could be expected. She further noted that additional hikes could be necessary if progress towards achieving their goals slows down. Such measures would be taken until monetary policy becomes restrictive enough to reach the Federal Reserve's 2% inflation target.
These comments come on the heels of a September policy meeting where a majority favored another rate increase. However, Daly, who does not have voting rights on policy this year, had previously stated on Sept. 22 that any efforts towards achieving the inflation target would be implemented "as gently as possible". This indicates a cautious approach towards future monetary policy adjustments by the Federal Reserve.
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