{"id":73028,"date":"2026-10-14T18:08:14","date_gmt":"2026-10-14T22:08:14","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/feds-daly-signals-likely-need-for-further-rate-hikes-amid-persistent-inflation\/73028\/"},"modified":"2026-10-14T18:08:14","modified_gmt":"2026-10-14T22:08:14","slug":"feds-daly-signals-likely-need-for-further-rate-hikes-amid-persistent-inflation","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/feds-daly-signals-likely-need-for-further-rate-hikes-amid-persistent-inflation\/73028\/","title":{"rendered":"Fed\u2019s Daly Signals Likely Need for Further Rate Hikes Amid Persistent Inflation"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>San Francisco Fed President Mary Daly<\/strong> stated it is <strong>&quot;more likely than not&quot;<\/strong> that the central bank will need to implement additional interest rate hikes to combat stubborn inflation.<\/li>\n<li>Despite the hawkish outlook, Daly signaled <strong>no immediate urgency<\/strong> for a move at the upcoming <strong>October 27-28<\/strong> policy meeting, citing the need for more data.<\/li>\n<li>The comments follow a hotter-than-expected <strong>September CPI report<\/strong>, which showed headline inflation rising <strong>0.6% monthly<\/strong> and <strong>3.7% annually<\/strong>.<\/li>\n<li>Markets are currently pricing in a <strong>66% probability<\/strong> that the Fed will hold rates steady in October, with a potential <strong>25 basis point hike<\/strong> shifted to the December meeting.<\/li>\n<\/ul>\n<h2>Daly Emphasizes Deliberation Over Urgency<\/h2>\n<p>San Francisco Federal Reserve President <strong>Mary Daly<\/strong> indicated on Wednesday that while the path toward higher interest rates remains probable, the central bank is not in a &quot;posture of urgency.&quot; Speaking in an interview with Reuters, Daly emphasized that policymakers have the flexibility to take their time and be &quot;thoughtful and deliberate&quot; regarding the timing of future adjustments.<\/p>\n<p>Daly\u2019s remarks reflect a balancing act within the <strong>Federal Open Market Committee (FOMC)<\/strong> as officials weigh the risks of above-target inflation against the potential for over-tightening. She noted that the current <strong>stable labor market<\/strong> provides the Fed with the necessary &quot;room to breathe,&quot; allowing the committee to focus primarily on achieving price stability without the immediate threat of a sharp economic downturn.<\/p>\n<h2>Inflation Data Pressures Policy Outlook<\/h2>\n<p>The policy debate has been re-energized by the latest <strong>Consumer Price Index (CPI)<\/strong> data. U.S. consumer prices advanced <strong>0.6% in September<\/strong>, the fastest monthly pace in five months, driven largely by a <strong>9.1% surge in gasoline prices<\/strong>. Core inflation, which strips out volatile food and energy costs, rose <strong>0.3%<\/strong>, suggesting that underlying price pressures remain entrenched across the broader economy.<\/p>\n<p>In response to these figures, Treasury yields and mortgage rates have seen upward movement. The average <strong>30-year fixed mortgage rate<\/strong> recently ticked up to <strong>7.5%<\/strong>, a level that analysts say is dealing a significant blow to the housing sector. <em>Market participants are closely watching whether these &quot;shocks&quot;\u2014including energy costs and geopolitical tensions\u2014prove temporary or become a permanent fixture of the economic landscape.<\/em><\/p>\n<h2>Market Expectations and Future Hikes<\/h2>\n<p>According to the <strong>CME FedWatch Tool<\/strong>, investors have largely aligned with Daly\u2019s &quot;no urgency&quot; signal for the immediate term. There is currently a <strong>66% chance<\/strong> that the federal funds rate will remain in its current range of <strong>3.75% to 4.00%<\/strong> following the October meeting. However, the probability of a <strong>quarter-point hike<\/strong> at the December 2026 meeting has risen to approximately <strong>63%<\/strong>.<\/p>\n<p>Daly, while not a voting member of the FOMC this year, remains a highly influential voice in the Fed&#39;s regular policy debates. She warned that secondary shocks, such as <strong>AI-driven demand for chips<\/strong> or new rounds of <strong>trade tariffs<\/strong>, could extend the timeline for reaching the Fed\u2019s <strong>2% inflation target<\/strong>. <em>As a result, the &quot;higher for longer&quot; narrative continues to dominate investor sentiment, keeping pressure on risk assets and long-term bond proxies.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways San Francisco Fed President Mary Daly stated it is &quot;more likely than not&quot; that the central bank will 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