Mary Daly, president of the Federal Reserve Bank of San Francisco, said Wednesday that the Federal Reserve should align its balance sheet policy with the new "patient" interest rate policy against a backdrop of major economic resistance in the United States.
"We don't want the balance sheet to be contrary to the purpose of interest rate policy," she told the Stanford Institute of Economic Policy.
The Federal Reserve has been reducing its balance sheet by $4 trillion at a rate of $50 billion a month for more than a year, and investors say the policy is tightening the financial environment. The Federal Reserve hinted last month that it would suspend its three-year interest rate hike.
Daley said Wednesday that rising downside risks, including a slowdown in global growth, tightening of the financial environment, and increased uncertainty in trade and other policies, are the basis for the suspension of interest rate rises.
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