Mary Daly Advocates Further Interest Rate Tightening to Fight Inflation
Federal Reserve Bank of San Francisco President Mary Daly stated that further interest rate tightening is likely necessary to combat persistent inflation in the services sector.
Mary Daly, President of the Federal Reserve Bank of San Francisco, stated that further interest rate tightening will likely be needed to combat persistent inflation. She argued that overlapping economic shocks, including tariffs and war-driven increases in food and energy prices, are compounding existing inflationary pressures.
Daly expressed specific concern regarding the services sector, which she characterized as extremely sticky once prices elevate. While she noted that medium- and long-term inflation expectations among consumers, businesses, and markets remain consistent with the 2% target, she warned against complacency.
Supporting the rate increase implemented in September, Daly emphasized the necessity of bringing inflation down to achieve price stability. She noted that inflationary pressure is not limited to sectors directly affected by oil or tariffs, suggesting a broader systemic issue that requires continued policy tightening.
