Fed's Daly says rate hikes likely needed, but not urgently
TLT•San Francisco Fed President Mary Daly said further rate hikes are more likely than not to curb inflation, but she sees no urgency to act at the October 27-28 meeting. Markets priced in about a 40% chance of a second straight hike after inflation reached 3.7% over the year through September.
1. No urgency to raise rates
Daly said the Fed will probably need to increase short-term rates further, but she is still deliberating on the timing and does not feel the central bank must decide at its October 27-28 meeting. The Fed's policy rate is currently in a 3.75%-4.00% range.
2. Inflation risks remain elevated
Consumer price inflation accelerated to 3.7% in the 12 months through September, with higher gasoline prices driving the overall increase. Daly said the inflation risk has risen, but underlying inflation did not sharply increase; she also said labor-market stability gives the Fed room to focus on price stability. Markets priced in about a 40% chance of a second straight rate hike at the next meeting.
