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Federal Reserve Bank of San Francisco President Mary Daly said Sunday that the Federal Reserve would “absolutely” hike interest rates by half a percentage point in September to try to rein in sweltering inflation.
Daly appeared on CBS’s Face the Nation and said Americans are struggling because inflation is at 9.1% — the highest since 1981 — while wage growth isn’t growing as fast.
“Americans are losing ground every day, so the focus has to be on bringing down inflation,” Daly said.
The potential rate hike comes as the US economy teeters on the brink of recession.
Fed’s Mary Daly says she doesn’t feel inflation because ‘I’ve had enough’, adding others ‘not so much’.
Mary Daly, Chair of the Federal Reserve Bank of San Francisco, promised struggling Americans that the Fed is going “too far” in fighting inflation. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
The Commerce Department reported last week that GDP fell 0.9% in the second quarter after contracting 1.9% in the first three months.
But Daly said she doesn’t see inflation as embedded in the economy, which she says has shown signs of cooling.
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“What I see is an imbalance between supply and demand. According to estimates by my own staff, we see that about 50% of the additional inflation is demand-related, the other 50% is supply-related,” she said.
Daly said he believes the Fed is in a good position to reduce demand and is already seeing signs of a slowdown in housing and investment.
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“As the economy cools, I think it’s going to take some time for the interest rate adjustments that we’ve made to see through,” Daly said. “And what we have not yet fulfilled is our promise to the American people.”