San Fran Federal Reserve President on how to slow the rate of inflation

Federal Reserve Bank of San Francisco President and CEO Mary Daly joined Yahoo Finance’s Brian Cheung to talk inflation and what the Federal Reserve plans to do about it in its upcoming meetings.

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MARY DALY: It's clear the economy doesn't need the accommodation we're providing. And so in order not to tip the economy over by reacting abruptly, we need to take a measured pace. But that measured pace still gets us up to the neutral rate, which I put at about 2.5%, by the end of the year.

BRIAN CHEUNG: What's the time horizon for that? How aggressively does the Fed have to get to that point?

MARY DALY: Well, if you think about just we have to get to 2.5, if we aim for that-- and I'm part of a committee, so we haven't deliberated on all of that yet, but that's my view-- get to 2.5 by the end of the year, then you need to make up that difference of two percentage points over the course of the remaining meetings. And so we will likely be taking a 50 basis point increase in a couple of the meetings, also starting our balance sheet reduction program. And those things are appropriate policy because Americans want relief from inflation. And we will do our part, which is to bring demand back in balance, to the extent we can, with supply.

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