Fed's Daly: Can start balance sheet reduction as early as the May meeting

San Francisco Fed President Mary explained that the labour market is extremely tight while the Fed is on a path to raising interest rates.

She added inflation is as harmful as not having a job while many of the imbalances we see are covid-related.

''I don't expect a big slowdown in US economy due to high oil prices,'' she said, adding that the Fed projections do not show a lot of 'overshooting' on rates.

''We can start balance sheet reduction as early as the May meeting.''

''The Fed will use balance sheet reductions in addition to rate hikes to reduce policy accommodation.''