April 15 (Reuters) - San Francisco Federal Reserve Bank President Mary Daly on Thursday said she’s going to need to see months of good data before she’ll be convinced that the economy is ready for any reduction of policy support.
“We are just in the beginning stages of seeing these good data,” she told reporters, referring to a surge in March retail sales reported earlier in the day, along with a decline in claims for unemployment insurance. “We are going to need repeated months of this before we can distinguish optimism about the future from the realization of the future.”
Daly said she’ll be particularly careful not to give up too soon on pushing down on the unemployment rate, given the time it could take for the many of the millions of workers who are still out of a job to return to their old jobs or find new ones.
“I am very optimistic, I feel hopeful, I’m bullish and I want to see it in the data before making policy because ultimately there’s a lot of uncertainty” around projections for economic data and the virus.
“It’s going to take a while, even with good growth,” she said, to make sure everyone who wants a job can get one, one of three preconditions the Fed has laid down before it will raise rates. “This is where we have to be extremely diligent, essentially and not simply write people off because we think well maybe that’s scarring.”
The other conditions for raising rates are for inflation to rise to 2% and to be on track to exceed that level for some time.
Daly said she will be watching measures of underlying inflation to gauge if there is what she expects to be “gradual” progress toward 2% inflation hidden underneath what she and others expects will be a temporary surge in headline inflation in coming months. (Reporting by Ann Saphir; Editing by Diane Craft)
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