Fed's Daly: US is shifting to sustainable growth

Friday, 08. February 2019 21:44

The new chief of the Federal Reserve Bank of San Francisco stressed the need for policymakers to communicate transparently their strategy regarding the central bank's balance sheet, following the shift in stance where Chair Jerome Powell acknowledged the runoff may end sooner than planned. Speaking on Friday, Mary Daly brushed off the danger that the United States economy could fall into a recession and claimed the slowdown means a return to a sustainable pace, the so-called growth potential.

The change isn't surprising after last year's growth in the vicinity of 3%, this year's nonvoting member of the Federal Open Market Committee said. She added financial conditions are now still tighter than one year ago and asserted the deterioration in housing is logical. Daly said she doesn't believe the "strong" employment numbers would have an effect on potential growth and structural issues.

Turning to the possibility of another government shutdown, the rate-setter expressed the opinion that the damage from the last, record long freeze was modest and reversible but that the return of such a regime would hit confidence much more.

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