Mary C. Daly, President and CEO of the Federal Reserve Bank of San Francisco, and a non-voting member of the Federal Open Market Committee (FOMC) in 2026, said the Fed is more likely than not to need additional rate hikes, with the timing still under deliberation.
However, she sees no reason to rush. Daly does not feel urgency to decide on a limited set of information, argued the committee has the time it needs, and pointed to more meetings ahead. The message is that hikes are likely, but the committee will pick its moment rather than react to a single print.
The September CPI report gave her reason for caution. Gas prices are lifting headline inflation, and core inflation remains stubborn, as she anticipated. Risks to above-target inflation remain high, though a steady labor market lets the Fed keep its focus on price stability.
Daly admitted she cannot tell whether inflation will ease as the shocks fade or worsen if they continue. Markets, she said, understand the Fed is committed to price stability and will do what it takes to achieve it.
Trading calmed after an initial robust reaction to the CPI data, which she called reassuring. She closed on accountability: the Fed must be crystal clear with the public about its objectives, what it answers for and how it balances risks.
Key Quotes:
Monetary Policy
We are more likely than not to need additional adjustments, but the timing of those adjustments to me is something we’re still deliberating.
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.
Why force urgency when you don’t need to have urgency? Why not take the time to be thoughtful and deliberate? And we have more meetings ahead of us.
Inflation
CPI indicates gas prices are boosting headline inflation; core inflation remains stubborn as anticipated.
Risks to above-target inflation remain high; a steady labor market allows focus on price stability.
Uncertain if inflation will ease as shocks fade or worsen if shocks continue.
The risk to inflation has gone up more, but risks are not realities, and reacting to risk when you have time to make a good decision, to me, feels imprudent.
Financial Markets
The markets understand that we’re committed to price stability, and we will do what it takes to achieve it.
Reassuring that after markets’ initial robust reaction to CPI data, trading is calmer.
Fed Transparency & Accountability
The responsibility is to be crystal clear with people about what your objectives are, what you’re accountable for, and how you’re going to balance the risks.