Senior Fed officials warn that Delta variants pose a threat to global recovery


A senior Fed official warned Delta coronavirus variant The low vaccination rate in some parts of the world poses a threat to the global recovery because she urges caution to remove monetary support for the US economy.

Mary Daley, President of the Federal Reserve Bank of San Francisco, said in an interview with the Financial Times: “I think one of the biggest risks to our future global growth is that we announced our victory over Covid too early.”

“We are not passing Pandemic, We are getting through the pandemic. “

Daly, who is the voting member Federal Open Market Committee This year, it pointed out the struggle of Japan and other countries to contain the virus. She said that the surge in the number of foreign infections and the lag in vaccination activities are inhibiting the economic rebound and may have a negative impact on the United States.

“If the global economy… can’t get it… a higher vaccination rate will really leave Covid behind [us], Then it’s not good for US economic growth,” Daly said. “The good number of vaccinations is great, but look at all the pockets that haven’t happened yet. ”

Daly’s warning came as investors sought safe havens in droves this week, pushing up U.S. government bond prices. SoarAs a result, US Treasury bond yields fell sharply, and benchmark 10-year Treasury bond trading prices were at their lowest level since February. Global stock markets fell on Thursday.

Many market participants attribute the sharp drop in U.S. Treasury yields to technical factors. But more and more people have expressed concern that the economy will not be able to sustain the hot growth rate that has been accompanied by the reopening so far, and predict that the recent surge in inflation will quickly disappear.

“In the United States, the news is very positive, but the global news is not so positive,” Daly said. “It’s always been good, but it’s not great. The market will react to these things, which of course will reduce the rate of return because they put the risk there.”

She added: “What you see is that people are becoming more aware of the downside risks facing the global economy.”

Federal Reserve June meeting It seems to be a catalyst for recent market trends. Central bank officials predict that they will raise interest rates faster and more aggressively than predicted earlier this year.

However, in an interview with the Financial Times, Daley, who is considered one of the more moderate Fed officials, said that there is no doubt that the Fed will stick to the monetary policy framework it adopted in August 2020. Excessive inflation in the pursuit of full employment.

“chair [Jay] Powell expressed this so clearly in his press conference that I think this is a highlight that deserves attention,” Daly said. “This is the message I have been saying: we are fully committed to our framework. This means eliminating job shortages and achieving an average inflation rate of 2%, which remains absolutely the most important. “

Daley’s comments were made at a critical moment in the Fed’s decision, as it discussed the cancellation of some of the large-scale monetary support provided for economic recovery at the beginning of the pandemic.

The minutes of the June FOMC meeting released on Wednesday showed that some policymakers believe that the Fed may soon begin to reduce the size of its asset purchases by US$120 billion per month. However, although Daley said that the debate around “cutting” is justified, the central bank must “focus on the long-term goals of full employment and price stability, and really have enough patience and perseverance to fulfill these promises. This is our opinion. What the American people did”.

In addition, Daley believes that raising interest rates from the current level of close to zero will have to wait until the end of the asset purchase. Other more hawkish Fed officials have hinted that there may be some overlap.

“We are ready to downsize in due course,” she said. “Then I want to see, how? How does the economy react to this? Because we can predict, we can predict, but we need to know to really say, “Oh, well, now is the time to enter the next phase. “This is a small amount of discussion about policy normalization and the upcoming issues of the federal funds rate.”

Daley said that the disagreements among Fed officials on how to quickly remove support for the economy disclosed in the minutes of the meeting are healthy, because officials put forward their “different views” instead of operating in the “echo chamber.”

As far as she is concerned, the chairman of the San Francisco Fed stated that she is not ready to enter the post-pandemic environment.

“I think there is always a sense of excitement,’oh my goodness: look, the vaccination works, this may be the end’. But it is too early to say that we have won here.”



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