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While speaking at the Reserve Bank of New Zealand (RBNZ)/International Monetary Fund (IMF) conference in New Zealand, the Federal Reserve Bank of San Francisco’s President Marcy C. Daly conveyed worries about the economy, monetary policy.

Key quotes

  • ‘Biased’ toward running economy hot, given low inflation, uncertainty over ‘full employment’.
  • Persistently undershooting Fed’s 2% goal is worrisome.
  • ‘Make-up’ strategy on meeting inflation goal could help counter inflation under-runs.
  • ‘Hot’ US labor market disproportionately benefits disadvantaged groups.
  • Overly tight labor market could encourage decisions that could harm long-term economic growth.
  • Corporate debt doesn’t pose ‘acute’ financial stability risk, but watching closely.
  • Fed may want to consider countercylical capital buffer if financial vulnerabilites increase.

FX implications

Comments like these generally have a little market impact unless carrying any direct strong challenges to the Fed’s present monetary policy.