Fed’s Daly says the economy can handle rate hikes, but a mild recession is possible

Fed’s Daly says the economy can handle rate hikes, but a mild recession is possible

San Francisco Federal Reserve President Mary Daly acknowledged Wednesday that a near-certain series of interest rate hikes over the coming months could tip the economy into a shallow recession, though she noted that isn't her expectation. Responding to the , the central bank official said she foresees "an expeditious march" through the year toward benchmark interest rates that would neither stimulate nor repress growth — the "neutral" rate, in Fed parlance. "Accounting for the risks of being too fast or too slow, I see an expeditious march to neutral by the end of the year as a prudent path," she said. The moves, Daly said, would help slow down an overheated economy that now has consumer price inflation running at an 8.5% annual pace. She cited research from Princeton economist and former Fed vice chair Alan Blinder, who asserted that in 11 previous Fed hiking cycles, seven "were followed by a mild recession or none at all — basically a smooth landing," she said in remarks at the University of Nevada Las Vegas. "Now, since I'm in Las Vegas, I will offer that I think those are pretty good odds." Asked later whether she considered a mild recession to be