Fed Daley: The July meeting is reasonable and the Fed needs to be vigilant and ready for action

ON 6 AUGUST, THE FED STATED THAT SHE “FULLY SUPPORTED” THE FED'S DECISION LAST WEEK TO MAINTAIN INTEREST RATES UNCHANGED. SHE SAID THAT AT A TIME WHEN INFLATION LEVELS WERE CLEARLY ABOVE THE 2 PER CENT TARGET, THE FED NEEDED TO COLLECT MORE DATA TO JUDGE WHAT POLICY RESPONSES SHOULD BE TAKEN IN THE FUTURE. DALEY STATED THAT, IN THE RUN-UP TO THE SEPTEMBER MONETARY POLICY CONFERENCE, THE FED “HAS A LOT OF INFORMATION TO GATHER” TO JUDGE WHETHER CURRENT INFLATION IS DRIVEN BY SUPPLY SHOCKS THAT WILL RECEDE OVER TIME, OR IS CREATING A MORE SUSTAINABLE INFLATION ENVIRONMENT. DELI SAID THAT THE FED SHOULD “TAKE A CLOSE LOOK AT THE INFORMATION COMING, WHILE BEING FULLY PREPARED TO ACT AS NECESSARY”. DALEY IS NOT CURRENTLY VOTING FOR FOMC. IN HER STATEMENT, SHE EXPRESSED CONCERN ABOUT HOW THE PUBLIC WOULD REACT TO THE NEW ROUND OF INFLATION, NOTING THAT, IF THE INFLATION MOMENTUM WERE TO INCREASE AGAIN, THE FED MIGHT NEED TO TAKE POSITIVE MEASURES TO BRING PRICE PRESSURES BACK TO TARGET LEVELS. KIM XIAN