The Zhitong Finance App learned that the 2027 FOMC voting committee and San Francisco Federal Reserve Chairman Mary Daly said on Friday that she expects the Fed to raise interest rates further, but like other policymakers, she believes the pace and timing of the rate hike is still uncertain. Daly said, “My expectation is that we will have to tighten our policies even more. Exactly when and how much to raise interest rates remains to be decided because we have to consider all relevant factors.” “More tightening may be necessary, of course... if the economic situation requires it, I am prepared to do it,” she said.
Daly's statement continued the recent cautious tone of Federal Reserve officials: on the one hand, he acknowledged that policy tightening might be necessary, and on the other hand, he emphasized that subsequent decisions would depend on economic data.
On the same day that Daly made these remarks, the US Bureau of Labor Statistics announced that in October, the US economy added 165,000 new jobs, and the unemployment rate fell to 4.1%. The unemployment rate is the labor-market variable that Federal Reserve officials are most concerned about. These figures far surpassed Wall Street expectations. Among them, the number of new jobs was almost three times what was expected by the Dow Jones survey consensus.
Daly called the report “good news for American workers,” but also pointed out that inflation is putting pressure on household finances. The data also showed that the average hourly wage rose 3.1% year on year in October; as measured by the Consumer Price Index (CPI), the inflation rate in September was 3.7%.
“When they saw that they could find a job, they continued to spend. They haven't left the labor market, but they are still spinning under the pressure of high inflation.” “High inflation has been going on for too long. After almost six years, we are really starting to feel this burden spread everywhere,” she said.
Daly said she is generally not worried about economic growth, but she is concerned about the continuation of inflation. She said, “The job market remains stable and stable, but it's not booming. You see real wages falling because those wages haven't really kept up with inflation.” “I think that's the key,” she said. There is good news in terms of employment, but it's not so clear whether Americans will make real progress in the labor market.”
The Federal Open Market Committee (FOMC), which sets interest rates, raised the Federal Reserve's benchmark overnight loan rate by 25 basis points to the target range of 3.75%-4% in September. However, the committee did not follow up on another rate hike last week, saying it preferred to wait for “more information” before deciding on the next move.
Daly will participate in the committee vote next year and said she still favors a gradual approach. Richmond Federal Reserve Chairman Thomas Barkin said on Thursday that he also expects interest rates to be higher in the future, but the timeline is uncertain.
Daly said, “I am very supportive and fully believe that September was the right thing to act. I also think it's a good thing to stay on hold at the last meeting because the world is full of uncertainty.”