Fed's Daly Says More Rate Hikes Likely as Inflation Lingers

San Francisco Federal Reserve President Mary Daly said on Friday that the US central bank will likely need to raise interest rates again, though she added that the timing and size of any move have yet to be settled, Briefs Finance reported. Daly made the comments in a live interview with CNBC’s Steve Liesman.

“My expectation is we’re going to have to tighten policy further,” Daly said, according to Briefs Finance, which noted that she continues to favour gradual moves.

Inflation pressure on households

Daly said Americans are on a “treadmill of high inflation”, IFA Online reported, citing the CNBC interview. She pointed to the strain rising prices are putting on household finances and said inflation had been elevated for close to six years.

According to Briefs Finance, Daly said she was not broadly concerned about economic growth and that her attention remained on inflation staying high. She described the labour market as stable and solid but not booming, and said real wages were falling because pay was not keeping pace with prices.

Jobs data and recent Fed moves

Daly spoke on the day the October jobs report showed employers added 165,000 positions, with the unemployment rate easing to 4.1% from 4.2% in September. She called the data good news for American workers. Briefs Finance said average hourly earnings rose 3.1% from a year earlier in October, while consumer prices climbed 3.7% in September.

The Fed raised its benchmark rate by a quarter point in September to a target range of 3.75% to 4%, a move Daly said she fully supported. At last week’s meeting, policymakers left rates unchanged, saying they would wait for more information. Daly said holding steady made sense because the world is full of uncertainty.

She is not alone in signalling further tightening. St. Louis Fed President Alberto Musalem said on October 30 that strong demand and persistent inflation meant “further interest-rate increases will likely be necessary”, 24/7 Wall St. reported. The outlet added that Fed presidents Beth Hammack and Tom Barkin have also backed a gradual path of rate increases.

24/7 Wall St. also noted that the 10-year Treasury yield fell to 4.90% on November 4 from a high of 5.31% on October 5, while housing starts dropped 5.2% in September for a third straight monthly decline.

What’s next

Daly, who will be a voting member of the Fed’s rate-setting committee in 2027, did not say when the next increase might come. Richmond Fed President Thomas Barkin has also signalled that more hikes are probable without giving a timeline, according to Briefs Finance.

Upcoming data flagged by 24/7 Wall St. include the Case-Shiller home price index on November 24 and the JOLTS job openings report on December 1.

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