Bonds News

Fed's Daly says too soon to know if December rate hike needed

IDAHO FALLS, Idaho, Nov 12 (Reuters) - The Federal Reserve will likely need to raise rates another two or three times over “the next period of time,” but it is too soon to know if a rate hike will be needed next month, San Francisco Federal Reserve Bank president Mary Daly said Monday.

“My modal forecast is for two to three (rate hikes) over the next period of time, with the exact timing not being certain,” Daly told reporters after a speech here. Asked if she believed the Fed should raise rates next month, when it is widely expected to increase its policy target range to 2.25 percent to 2.5 percent, she said she was thinking about it seriously, but “I think it’s premature to say that it’s definitely needed.”

Daly said she believes the Fed should gradually raise rates toward “neutral,” when in a healthy economy the level of borrowing costs neither boosts nor slows growth, and she said her estimate of neutral is between 2.5 percent and 2.8 percent.

“If you asked me today I’d probably pick” the middle of the range, about 2.7 percent, she said. Asked if the Fed will need to move to “restrictive” monetary policy next year, as some policymakers have suggested, she said such a discussion was premature. (Reporting by Ann Saphir Editing by Chizu Nomiyama)