(Reuters) - San Francisco Federal Reserve President Mary Daly on Monday downplayed the usefulness of yield curve control for U.S. monetary policy, saying that while it could be a “little helper” should other tools fail to deliver, it would not be a first choice.
“Targeting forward guidance and quantities on the balance sheet would be the policies I would want to use before we go to yield curve control” she told reporters on a conference call, saying that she is studying the costs and benefits of the approach.
If forward guidance and bond-buying aren’t enough to keep borrowing costs low, “you can think of yield curve control as a little helper... but if we have very robust forward guidance then a lot of that movement in rates at the short end and even at the longer end, that gets done without having to go to yield curve control.”
Reporting by Ann Saphir; Editing by Chizu Nomiyama
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