Federal Reserve Bank of San Francisco President Mary Daly said the US central bank has more work to do to control inflation even as data for July showed modest price increases.
(Bloomberg) — Federal Reserve Bank of San Francisco President Mary Daly said the US central bank has more work to do to control inflation even as data for July showed modest price increases.
Consumer-price data out earlier Thursday “came in largely as expected, and that is good news,” Daly, who doesn’t vote on monetary policy this year, said in an interview on Yahoo! Finance. “It is not a data point that says victory is ours. There’s still more work to do. And the Fed is fully committed to resolutely bringing inflation back down to its 2% target.”
Bureau of Labor Statistics data out earlier showed the core consumer price index — which excludes often-volatile food and energy costs — rose 0.2% for a second month, marking the smallest back-to-back gains in more than two years. The overall CPI also increased 0.2% in July and 3.2% from a year earlier.
The Fed in July raised the federal funds rate to a range of 5.25% to 5.5%, the highest level in 22 years. The median estimate of Fed officials’ most recent quarterly projections, published in June, showed two more rate increases this year, the first of which took place last month.
The central bank will have more key economic data in hand before the next policy meeting in September, including another CPI report. Investors do not currently expect another rate hike this year, based on prices of futures contracts.
Fed officials are divided on whether the central bank should be finished with rate increases. Philadelphia Fed President Patrick Harker said Tuesday that policymakers may be able to stop increasing interest rates as long as there aren’t any surprises in the economy, though rates would need to stay at their current elevated levels for some time.
Governor Michelle Bowman on Monday reiterated her view that the Fed may need to raise rates further in order to fully restore price stability.
Daly said Thursday she is dependent on more information and data for future Fed moves.
“I was very supportive of the rate hike we took, and I’m very supportive of not prematurely projecting what we’ll be doing,” she said.
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