Fed's Daly: Lower inflation, lower rates mean less monetary policy space to combat next downturn

Lower inflation and lower interest rates mean there will be less monetary policy space to combat the next downturn, San Francisco Federal Reserve Bank President Mary Daly said on Monday.

"Inflation a bit above the target is far better than a bit below in today's environment," Daly argued. "Historically low unemployment rate does not mean labor market is historically tight."

Daly further noted that the fiscal policy needs to play a larger role in smoothing economic shocks.

USD reaction

The US Dollar Index, which tracks the dollar's performance against a basket of major currencies, largely ignored these comments and was last up 0.13% on a daily basis at 98.83.