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The Federal Reserve is still focused on raising interest rates despite the good news from June’s inflation readings, said San Francisco Fed President Mary Daly on Thursday.
“It is really too early to declare victory on inflation,” Daly said, in an interview on CNBC.
The June data was very positive and it would be good if it was a downward trend, but Daly said she was in a “wait-and-see” mode.
See: U.S. inflation slows again, CPI shows, as Fed weighs another rate hike
At the beginning of the week, before the inflation data was released, Day said two more interest-rate hikes were likely needed this year.
Read: Higher rates likely to combat ‘persistently’ high inflation
Asked if she is changed her stance, Daly said that two hikes was “a reasonable projection” that preserved the option for the Fed to move.
“Right now, all my attention is on decidedly if we have to hike more and how much more we need to hike in order to get inflation down to 2%,” Daly said.
Daly said that the inflation outlook remains uncertain.
Traders in the derivatives market think the Fed will raise their benchmark rate by 25 basis points at their meeting in two weeks and then move to the sidelines. That would put the so-called “terminal rate” at 5.25% – 5.5%.
The median forecast of Fed officials at the last policy meeting, including Daly, was for two more interest rate hikes this year. Only a few officials think that the Fed should not raise rates again this year.
Stocks
DJIA,
SPX,
were higher on Thursday and the yield on the 10-year Treasury note
TMUBMUSD10Y,
fell to 3.80%.
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