U.S. wage growth remained below the latest annual inflation reading, and San Francisco Federal Reserve Bank President Mary Daly said the Fed may need to raise rates again as price pressures persist.
Daly made the assessment in a Nov. 6 interview with CNBC. She said officials would consider incoming economic information before deciding whether or when to act. “My expectation is we’re going to have to tighten policy further,” she said. Daly did not set a timetable or specify the size of a possible increase.
The Bureau of Labor Statistics reported that employers added 165,000 jobs in October and unemployment edged down to 4.1%. Average hourly earnings rose 3.1% from a year earlier that month, while the consumer price index increased 3.7% year over year in September.
Daly welcomed the job gains but said inflation continued to weigh on household finances. She said people were still finding work and spending, while pay gains failed to keep pace with prices. She described labor conditions as steady but not unusually strong, and said inflation’s persistence concerned her more than economic growth. Daly also said inflation had remained high for almost six years, with its burden spreading across households.
The Federal Open Market Committee (FOMC) raised its target range for the federal funds rate by 0.25 percentage point in September, to 3.75% to 4%. On Oct. 28, it left the range unchanged and said additional information would guide its policy stance. Daly said she supported both decisions and continued to favor a gradual approach.
Richmond Fed President Thomas Barkin also expects further increases may be needed, CNBC reported, though he has not identified when. The next report on October CPI is scheduled for Nov. 10, and the FOMC’s next meeting is set for Dec. 8-9.
