(Bloomberg) - Federal Reserve Bank of San Francisco President Mary Daly said the central bank could raise interest rates as early as March to fight high inflation, but she cautioned against overreacting and tightening policy too quickly.
“We are not behind the curve,” Daly said Monday in an interview during a Reuters Breakingviews event. “When you’re trying to get an economy from extraordinary support to one that’s going to just gradually put it on to a self-sustaining path, you have to be data-dependent -- as we say -- but you also have to be gradual and not disruptive.”
Chair Jerome Powell said last week that officials were ready to raise rates in March to curb the strongest inflation in four decades. But he declined to give specific guidance on the policy path thereafter, saying it would depend on the economic data.
His reticence has opened the door to hiking at every meeting this year if needed, though there is a wide spread of forecasts among top Wall Street banks, which have penciled in as many as seven quarter-point moves in 2022.
Outlook Change
Fed officials projected three rate increases this year in quarterly forecasts they published in December, though Powell said the inflation outlook had deteriorated somewhat since then.
Atlanta Fed President Raphael Bostic told the Financial Times in an interview that three 2022 hikes were still his outlook, but he would back doing more -- including raising rates by 50 basis points -- if warranted by the data.
Daly, who has been one of the Fed’s most dovish officials, avoided providing a prediction of how quickly the central bank would act.
By Laura Curtis and Steve Matthews
