Fed's Daly: need for more hikes hinges on what happens with shocks
TLT•Mary Daly said further rate hikes depend on whether inflationary shocks from tariffs, oil prices and AI fade or persist. She supported September’s rate hike and said rising AI-related chip demand could add to inflationary pressures.
1. Shocks and rate hikes
San Francisco Fed President Mary Daly said she supported September’s interest-rate hike in the face of rising inflation risks. Whether more hikes are needed depends largely on whether shocks pushing up inflation fade or continue to compound, she said in an interview.
2. AI and inflation risks
Daly said tariffs, oil prices linked to the Middle East conflict and AI could have temporary effects if they prove to be conventional shocks. But repeated tariff increases or shocks that last longer than forecast could extend their effects; rising AI-related demand for chips could also make inflationary pressures more persistent. Daly does not vote on rate-setting this year but participates in the Fed’s regular policy debates.
