(AFP) Mary Daly, president of the San Francisco Federal Reserve Bank, said Thursday it’s too early to “declare victory” in the fight against inflation.
Daly’s comments came after U.S. consumer prices stayed the same in July because of a big drop in the price of gasoline. This was good news for Americans who had seen inflation go up for two years.
Daly would not rule out a third consecutive 0.75% point interest rate rise at the central bank’s next policy meeting in September, but she said a half-percentage point rate rise was her “baseline.” (https://on.ft.com/3SEkQ7E)
“Month-to-month numbers show consumers and businesses are getting some relief, but inflation remains much too high,” Daly said in a Wednesday interview.
According to the report, she said interest rates should reach 3.5% by the end of the year. The fed funds rate, which banks charge each other to borrow or lend overnight reserves, is 2.25-2.5%.
Slowing U.S. inflation may allow the Federal Reserve to slow the pace of future interest rate hikes, but policymakers will continue to tighten monetary policy until price pressures are broken.
Neel Kashkari, president of the Minneapolis Fed, said the Fed is “far, far away” from declaring victory on inflation despite “positive” CPI numbers.
Kashkari, the Fed’s most hawkish member, said he hasn’t “seen anything that changes” the need to raise rates to 3.9% by year’s end and 4.4% by 2023.
