SAN FRANCISCO: The Federal Reserve (Fed) will probably need to increase short-term interest rates further to rein in too-high inflation, San Francisco Fed president Mary Daly says, but she also signalls there’s no need to do so at the US central bank’s Oct 27 to Oct 28 meeting.
“We are more likely than not to need additional adjustments, but the timing of those adjustments to me is something we’re still deliberating,” Daly told Reuters.
“I don’t feel urgent that we have to decide with a limited set of information. I think we have the time that we need.”
Several of Daly’s colleagues have also signalled in recent weeks that the Fed is unlikely to raise rates this month.
The Fed’s policy rate is in the 3.75% to 4% range, and longer-term borrowing costs are even higher, with some – like 7.5% mortgage rates – putting an increasingly obvious damper on demand in some parts of the economy.
Daly said she feels financial markets understand the Fed’s “reaction function”, pointing to how traders responded to data earlier on Wednesday that showed consumer price inflation accelerated to 3.7% in the 12 months through September, a bit faster than economists had anticipated.
The Fed targets 2% inflation by a different, but related, measure. — Reuters
