Daly expects the Fed to raise the rate above 5%

Daly expects the Fed to raise the rate above 5%

Federal Reserve Bank of San Francisco President Mary Daly expects the central bank to raise interest rates to some point above 5% before pausing, though the final level is unclear and will depend on developments. incoming inflation data.

As for the upcoming Federal Reserve meeting at the end of the month, the central bank could raise rates by 50 basis points for the second time in a row or slow to a quarter-point hike, Daly said Monday in an interview. broadcast live with the Wall Street Journal.

“Doing it in more gradual steps gives us the ability to respond to incoming information,” said Daly, who is not voting on monetary policy this year. The official emphasized that it is too soon to “declare victory” over persistent inflation.

At its December meeting, the Fed slowed its pace of rate hikes while emphasizing that further tightening is ahead and that borrowing costs will likely remain high for some time to bring inflation back to the central bank’s target of 2 %.

Last month, Daly said she expects the rate to stay high for longer than markets, which have priced in cuts this year, project. She said keeping the fed funds rate at its peak for 11 months is a “reasonable starting point.”

Fed officials will meet on January 31 and February 1 and are expected to either make another 50 basis point rate hike or slow the pace further to a quarter of a percentage point, though traders are anticipating that last point. as the most likely. A report on Friday showed that hiring in the US labor market remained strong in December, while wage increases cooled.

Original Note: Daly Sees Fed Raising Rates Above 5% But How Far Is Unclear

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