Mary Daly, the newest voting member at the Federal Reserve, signaled Oct. 16 that she would favor the Fed's path of gradually hiking interest rates to ensure the economy grows at a sustainable pace.
In her first remarks since becoming president of the Federal Reserve Bank of San Francisco, Daly said her monetary policy outlook has been consistent with the U.S. central bank's gradual interest rate increases.
The Fed raised its benchmark federal funds rate again in September, its eighth rate hike since it began tightening policy in December 2015.
"It's like you put a toe in the water, and then you see how many ripples it makes in the economy," she said at an event at Wellesley College. "Does it get the impact that you hoped for? Does it slow the economy in the way you hoped for so we can get a soft landing to this sustainable pace? ... And then you put another toe in the water, another rate increase, and then you watch again."
Daly will vote at the next Federal Open Market Committee meetings in November and December. She said, though, that she would not share her votes ahead of time because she thinks the best approach to policymaking is to collect all relevant information until the decision day.
"There's no reason to be premature about what to think because it's not here yet," she said.
She also outlined two-sided risks the Fed faces at this point in the economic expansion: whether keeping rates too low might spur unhealthy inflation increases and whether hiking rates too quickly might prevent some from benefiting from a stronger labor market. Fed Chairman Jerome Powell highlighted those two risks in his speech at the Kansas City Fed's annual Jackson Hole conference this year.
Daly spoke shortly after President Donald Trump took another shot at the Fed for its rate hikes, telling FOX Business that his "biggest threat is the Fed" because it is "raising rates too fast, and it's too independent."
Asked about Trump's recent criticisms, Daly highlighted research showing the importance of countries having an independent central bank.
"The way that I think about this is, we're doing our jobs, we continue to make interest rate policy that we think is appropriate for the economy," she said. "And that is what we do. You just keep going back and doing your job."