The Federal Reserve will probably have to lift interest rates again, San Francisco Fed President Mary Daly said Friday. She declined to say when that move might come or how large it would be.
Daly, who becomes a voting member of the central bank's rate-setting committee next year, said she is ready to back further tightening if the economy calls for it. She still prefers to move gradually.
Her comments came hours after a stronger-than-expected labor report. The Bureau of Labor Statistics said employers added 165,000 jobs in October, nearly triple the consensus forecast, and unemployment slipped to 4.1%.
Daly called the hiring numbers good news for workers but said rising prices are eating into the gains. Average hourly earnings climbed 3.1% from a year earlier in October, while consumer prices rose 3.7% in September.
That gap leaves real wages falling, she said, describing a job market that is stable and solid but not booming. Growth in general does not worry her. Her concern is how long inflation has stayed elevated, which she put at almost six years.
They see that they can get jobs, they continue to spend. They're not out of the game, but they are on a treadmill of high inflation,
Mary Daly, San Francisco Federal Reserve president
The Federal Open Market Committee raised its benchmark overnight rate by a quarter point in September, to a range of 3.75% to 4%. Last week it held steady, saying it wanted more information first. Daly said she supported both decisions and called the pause sensible amid widespread uncertainty.
She is not the only Fed official signaling more increases. Richmond Fed President Thomas Barkin said Thursday that he also expects higher rates but is unsure of the timeline.
