Fed's Daly says low vaccination rates a risk to global economy - FT

[July 09, 2021]  (Reuters) -Low vaccination rates in some regions of the world pose a threat to the United States and global growth, Federal Reserve's Mary Daly told the Financial Times https://on.ft.com/3e22TgK, adding that the central bank was fully committed to eliminating shortfalls in employment.

Daly, president of the Federal Reserve Bank of San Francisco, said it was important for the rest of the world to reach higher rates of vaccination, and the inability to achieve that would be a "headwind" on U.S. economic growth.

"I think one of the biggest risks to our global growth, going forward, is that we prematurely declare victory on COVID-19," Daly said in the interview published on Friday.

In the minutes of the central bank's June policy meeting released on Wednesday, "various participants" felt conditions for reducing asset purchases would be "met somewhat earlier than they had anticipated."

Others saw a less clear signal from incoming data and cautioned that reopening the economy after a pandemic left an unusual level of uncertainty which required a "patient" approach to any policy change.

San Francisco Federal Reserve Bank President Mary Daly poses at the bank’s headquarters in San Francisco, California, U.S., July 16, 2019. REUTERS/Ann Saphir/File Photo

Daly told FT that the central bank need would need to see the effects of tapering before moving on to increasing interest rates and policy normalization.

"We're ready to taper at the appropriate time."

Daly also said that the Fed was fully committed to its framework. "That means eliminating shortfalls in employment and delivering average inflation of 2%, and that is still absolutely paramount," she added.

(Reporting by Shubham Kalia; editing by Uttaresh.V)

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