Fed’s Daly says she’s not sure interest rates are high enough to finish the job on inflation

While markets are demanding certainty from the Fed, “the truth is we don’t know,” she added.

At the moment, Fed policy was “in a very good place,” Daly said, able to react however the economy evolves.

The Fed needs to stand in a “ready position,” on its toes to raise interest rates again or stop monetary tightening depending on the economic data, she added.

“That ready position is something everyone understands in sports….but when we do it in policy, people find it confusing,” Daly said.

The Fed isn’t focused on one or two reports. Anecdotal data will play a role.

“I’d really like to get out of the idea that data dependence is a single report or even two reports,” Daly said. Anecdotal data will play a big role. “It will be constellation of data that we are going to have to look at,” she said.

At its meeting last week, the Fed left interest rates unchanged in a range of 5.25%-5.5%.

The central bank’s economic forecast in September had one more rate hike penciled in, but traders in derivative markets see only a slim chance of a move at the next meeting in December. They see a greater chance of an interest-rate hike early next year.

Stocks
DJIA

SPX
were higher on Friday while the 10-year Treasury yield
BX:TMUBMUSD10Y
rose to 4.64%.