Fed's Daly: Monetary Policy and Economic Mismatch Will Lead to Unexpected Consequences

Federal Reserve FOMC voter Daley said this year that the Federal Reserve does not want to "over-tighten monetary policy when the economy slows down." She added that failing to adjust policy to inflation progress and slowing economic growth "would lead to unwanted outcomes, namely price stability, but an unstable and crumbling labor market." Her remarks are consistent with those of Atlanta Fed President Bostic. Bostic recently stated that waiting too long to cut interest rates "does indeed bring risks." The weak job report in July raised concerns about the health of the U.S. economy and to some extent triggered a global stock market sell-off. Daley said that companies generally do not resort to layoffs. Instead, they are now cutting discretionary spending to adapt to a world that is no longer a "reckless growth" but a "bubble world."