Fed's Daly says it will take 4.5%/5% to hit inflation

Reuters -- San Francisco Federal Reserve Bank President Mary Daly said she believes that it will take raising interest rates to a 4.5% 5% range and holding them there until the end of 2023 to get inflation under control, but she also supports doing more if inflation doesn't fall as expected.

Daly told reporters after an event at Boise State University that they were quite satisfied with policymakers projections last week that show the majority believe the Fed's policy rate will go up to 4% -- 4.5% this year and 4.5% -- 5% next year. It's going to take restrictive policy for a period of time to get clear and convincing evidence that inflation is returning to 2% - so from my mind, that's going to be at least through next year. The Fed last week delivered a third-straight 75 basis point interest rate increase, lifting its policy rate target range to 3% -- 3.25%. Asked if global market turmoil could lead to pausing rate hikes, Daly said global financial markets are just one part of the equation.

I'm looking at having financial conditions tightened more than the funds rate has tightened, and more than they were projected to be tight, because people are realizing that there's global tightening everywhere and financial markets are responding. If that's the case, slowing the pace of increases but still heading for the right terminal rate would be appropriate, Daly said.

But if inflation continues to print very high and we get no easing of inflation and only modest easing of labor markets, that's basically an economy that's still got a lot of momentum and inflation is still too high - we're going to have to keep moving up because we're going to understand that the terminal rate isn't as close as it would be, because we're going to understand that the terminal rate isn't as close as it would be.