Fed’s Daly: COVID-19 caused inflation, but Fed has to fix it

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FILE PHOTO: San Francisco Federal Reserve President Mary Daly reacts at the Los Angeles World Affairs Council Town Hall, Los Angeles

– San Francisco Federal Reserve Bank president Mary Daly on Friday said COVID-19 is the main reason for overly high inflation, and the U.S. central bank needs to raise interest rates to reduce demand to bring it better in line with crimped supply.

The latest Omicron variant of COVID-19 will only extend the time period that inflation will last, because it means supply chains will stay tangled and workers hesitant to return to the labor force, Daly said in a New York Times interview on Twitter Spaces. “We are going to have to adjust policy to ensure we achieve price stability,” she said, “We want to bridle the economy a little bit.”

(Reporting by Ann Saphir, Editing by Franklin Paul)