Daly backs September hike, ties further moves to shocks
Mary Daly, who leads the San Francisco Federal Reserve, voiced support on Tuesday for the rate increase that took effect in September, pointing to mounting inflation concerns, Reuters reported. Speaking with Axios, she explained that whether more tightening is warranted depends largely on whether the forces pushing inflation higher look set to dissipate or to reinforce one another over time.[S1][S2][S3][S4][S5]
Daly identified those forces as tariffs, oil prices connected to the Middle East conflict, and artificial intelligence. Should they turn out to be ordinary shocks that come and go with only short-lived consequences, she said, additional rate increases might be unnecessary, and she still sees some chance of that scenario. If instead they amplify one another or last beyond expectations, the stretch of time they weigh on the economy would grow longer. She also raised the prospect that a fresh round of tariff talks could yield more tariffs, which she called a second shock piled onto the first.[S1]
Daly noted that AI-driven demand for chips is climbing and may intensify price pressures, which would make the shocks' effects linger. Although she holds no vote on rate decisions this year, she takes part in the Fed's routine policy discussions in Washington.[S1]
Context: temporary shocks versus persistent pressure
These remarks situate the September rate increase inside a judgment about whether today's inflation shocks are fleeting or likely to last. By stressing how long the shocks endure and how they interact rather than any fixed rate path, Daly casts the choice on additional increases as contingent on how those pressures unfold.[S1]
