San Francisco Federal Reserve President Mary Daly acknowledged Wednesday that a near-certain series of interest rate hikes over the coming months could tip the economy into a shallow recession, though she noted that isn’t her expectation.
Responding to the worst inflation the U.S. has seen in more than 40 years, the central bank official said she foresees “an expeditious march” through the year toward benchmark interest rates that would neither stimulate nor repress growth — the “neutral” rate, in Fed parlance.
“Accounting for the risks of being too fast or too slow, I see an expeditious march to neutral by the end of the year as a prudent path,” she said.
The moves, Daly said, would help slow down an overheated economy that now has consumer price inflation running at an 8.5% annual pace.