(Reuters) – The U.S. Federal Reserve should start raising interest rates from near zero in March and can comfortably raise them to 1.25% by the end of the year to help rein in inflation but keep supporting the economy, San Francisco Federal Reserve Bank president Mary Daly said on Monday.
“If you get to that point, so say that’s the reality, that’s quite a bit of tightening but it’s also quite a bit of accommodation left in the system because the terminal rate of interest is 2.5%, so you are supporting the economy, not pulling away the punchbowl completely and causing disruptions but you are taking away some of the extraordinary accommodation we have been providing,” Daly said in an interview with Reuters Breakingviews. “I think that balance is the appropriate thing to do with the uncertainty we face.”
(Reporting by Ann Saphir and Lindsay Dunsmuir; Editing by Chizu Nomiyama)
