San Francisco Fed President Daly Expects Rate Hikes in the US — CNBC

In the United States, San Francisco Federal Reserve Bank President Mary Daly said that the Federal Reserve will likely have to continue tightening monetary policy to combat inflation. At the same time, she noted that the timing and scale of possible rate hikes have not yet been determined.

As CNBC reports, Daly said she is prepared to support further policy tightening if economic conditions require it. According to her, decisions will be made based on incoming economic data.

Stronger labor market data

The statement came after the publication of data from the U.S. Bureau of Labor Statistics: in October, the U.S. economy added 165,000 jobs, while the unemployment rate fell to 4.1%. The number of jobs created was nearly three times higher than the Dow Jones consensus forecast.

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Daly called the report positive news for American workers, but stressed that inflation continues to put pressure on household budgets. Average hourly earnings rose by 3.1% year-on-year in October, while consumer price index inflation stood at 3.7% in September.

Inflation outpaces wages

According to the San Francisco Fed president, the labor market remains stable and resilient but is not showing excessive growth. She pointed out that real wages are declining because their growth is not keeping pace with inflation.

In September, the Federal Open Market Committee raised the target range for the federal funds rate by 0.25 percentage points to 3.75–4%. At its most recent meeting, the committee did not raise the rate again, explaining this by the need to gather more information for its next decision. Daly supported a gradual approach, citing uncertainty in the world.