Fed’s Daly (still going!) – Need more urgency on moving rates higher, likes 0.25% in March

Earlier from Daly:

• More again from Fed’s Daly – Policy is too accommodating
• More from Fed’s Daly – 4 hikes is my preference, but most likely it’ll be more
• Fed’s Daly:  Inflation 
  Inflation
  
  Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
  
  Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
  Read this Term is too high and has spread beyond covid-affected sectors

Even more now:

• need ‘a little more urgency’ on moving interest rates up
• should start with a quarter-point interest rate hike in March, too early to call for half-point hike
• down the road can decide if half-point hikes are necessary
• have adjusted stance to call for more tightening as inflation has broadened, labor supply hasn’t recovered, supply chains still disrupted
• should get balance sheet reduction underway earlier, not later in the year as had previously thought
• raising rates by a quarter point every other meeting ‘doesn’t satisfy the moment’
• we need to get policy in line with economy, but we can’t be ‘impatient’ about doing it all today

Headlines via Reuters

OK, so Daly confirms she is in the quarter point hike in March camp. Daly tends to be reflective of Powell’s views, so I guess 25bps is it.

The Federal Open Market Committee March meeting is on the 15th and 16th.