Katrina Saraiva | Bloomberg
San Francisco Fed Chair Mary Daly suggested a 50 basis point rate hike at the next Federal Reserve monetary policy meeting was not a stop and said the Federal Reserve is “way too far” in allowing inflation reduce.
“Absolutely – and we have to be data dependent,” Daly said on CBS’ Face the Nation when asked about the possibility of a half-percentage-point hike by the Fed in September. “We have to keep our minds open. We have two more inflation reports coming out, another jobs report.
A strong jobs report on Friday bolstered support for another 75 basis point rate hike by the Fed. Policymakers have another jobs report and several inflation indicators ahead of this September 20-21 meeting. US employers added 528,000 jobs in July, more than double what economists had estimated.
The Daily said earlier this month that a 50 basis point hike was “a sensible thing to do in September”. On Sunday, she cited signs the economy is slowing, prices are rising and the sweltering job market is slowing.
“Right now I think the most important thing is that inflation is very high,” said Daly, who is not a voter on the Federal Open Market Committee’s policymaking panel this year. “Americans are losing ground every day, so the focus must be on bringing inflation down.”
The Fed has hiked interest rates sharply this year, including a 75 basis point hike in June and July to push inflation to a 40-year high.
After the July meeting, Fed Chair Jerome Powell said another larger rate hike in September was possible, but gave no specific guidance going forward, saying future hikes would depend on data. Investors interpreted the comments as a move towards a less aggressive currency and the market rallied in response.
Fed Chairmen last week staunchly resisted that notion, arguing that the central bank has no intention of backing down from aggressive rate hikes and that it would take big news to convert its currency.
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