Fed's Daly says rate hikes likely needed, but not urgently
TLT•San Francisco Fed President Mary Daly said the Fed will probably need to raise short-term rates further to curb inflation, but she sees no urgency ahead of its October 27-28 meeting.
1. No urgency to raise rates
Daly said the Fed is more likely than not to need additional rate increases, but policymakers are still deliberating on timing. She said there is no need to decide at the October 27-28 meeting with limited information and noted that more meetings lie ahead.
2. Inflation risks remain elevated
The Fed's policy rate is 3.75%-4.00%. September consumer inflation rose 3.7% over 12 months, faster than economists expected, while higher gasoline prices drove the overall increase and underlying inflation did not sharply accelerate. Daly said the inflation risk had increased, but the labor market's continued stability gives the Fed room to focus on price stability. Market pricing put the chance of a rate hike at the next meeting at about 40%.
