San Francisco Federal Reserve President Mary Daly said further interest rate increases may be necessary to bring down inflation, noting that a growing number of businesses are considering raising prices.
"I lean toward thinking that further policy tightening will be needed, because we can see persistent pressure on inflation, and that pressure is not confined only to the industries most directly affected by tariffs or oil prices," Daly said Thursday at the Stanford Institute for Economic Policy Research in California.
She said she is hearing from a rising number of businesses that they need to pass higher input costs on to consumers.
Policymakers left interest rates unchanged at their October meeting after cutting in September. The September cut was the first of 2023, as officials try to cool inflation that has run above the 2% target for more than five years. Daly, who does not have a monetary policy vote this year, reiterated her support for those decisions.
Data in recent months have shown rising price pressures across multiple categories, not only in areas directly tied to tariffs and higher energy costs, deepening policymakers' concerns.
In recent days, several policymakers have said they would support a Fed rate hike at the next meeting in December. Among them, Fed Governor Christopher Waller said the Fed should consider a larger-than-usual 50 basis point increase. Another official, Dallas Fed President Lorie Logan, said more frequent rate increases may be needed this winter.
Futures markets currently expect the Fed to raise rates by 25 basis points at each of its next three meetings — in December, January and March.
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