The head of the San Francisco Federal Reserve said a key U.S. interest rate is likely to be raised a “couple” of a more times this year to combat “persistently” high inflation.
Mary Daly said inflation is slowing, but it’s still far too high.
“I think it’s a very reasonable projection to say a couple of more rate hikes will be necessary,” she said in an interview Monday at the Brookings Institution in Washington, D.C.
The Fed is widely expected to raise a key U.S. interest rate again after its July 25-26 meeting.
The central bank skipped a rate increase last month for the first time in 11 meetings since the spring of 2022 to try to figure out how much its prior rate hikes have slowed the economy.
While some parts of the economy such as manufacturing have retrenched, other industries are still going strong, especially in services such as travel and recreation. The labor market is also quite robust, with the unemployment extremely low at 3.6%.
The Fed is aiming to restore inflation, now running between 4% to 5%, to pre-pandemic levels of 2% or so. It’s raised a key short-term U.S. interest rate to a top end of 5.25% from near zero a year earlier.
The Fed is primed to keep raising rates until the economy slows even further and the central bank is convinced high inflation is going away.
Daly is not a voting member this year of the Fed’s interest-rate setting committee.
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