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Daly's remarks comes as U.S. consumer prices remained unchanged
in July due to a sharp drop in the cost of gasoline, delivering
the first notable sign of relief for weary Americans who have
watched inflation climb over the past two years.
In an interview with the Financial Times, Daly did not rule out
a third consecutive 0.75% point interest rate rise at the
central bank's next policy meeting in September, however, she
said that a half-percentage point rate rise was her “baseline”.
(https://on.ft.com/3SEkQ7E)
"There's good news on the month-to-month data that consumers and
business are getting some relief, but inflation remains far too
high and not near our price stability goal," the newspaper
quoted Daly as saying during the interview conducted on
Wednesday.
She also maintained that interest rates should rise to just
under 3.5 per cent by the end of the year, according to the
report. The fed funds rate, the rate that banks charge each
other to borrow or lend excess reserves overnight, is currently
in the 2.25%-2.5% range.
Slowing U.S. inflation may have opened the door for the Federal
Reserve to temper the pace of coming interest rate hikes, but
policymakers left no doubt they will continue to tighten
monetary policy until price pressures are fully broken.
The Fed is "far, far away from declaring victory" on inflation,
Minneapolis Federal Reserve Bank President Neel Kashkari said at
the Aspen Ideas Conference, despite the "welcome" news in the
CPI report.
Kashkari, the Fed's most hawkish member, said he hasn't "seen
anything that changes" the need to raise the Fed's policy rate
to 3.9% by year-end and to 4.4% by the end of 2023.
(Reporting by Akriti Sharma in BengaluruEditing by Shri
Navaratnam & Simon Cameron-Moore)
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