The Federal Reserve still has a lot of work to do before it gets inflation under control, San Francisco Fed President Mary Daly said Tuesday.
Futures pricing indicates the markets see the Fed raising rates another 0.5 percentage point in September and another half percentage point through the end of the year, taking the funds rate to a range of 3.25%-3.5%, according to CME Group data. The expectation is then that as the economy slows due to the policy tightening, the Fed then would start cutting by next summer."That's a puzzle to me," she said."I don't know where they find that in the data.
Chicago Fed President Charles Evans also spoke Tuesday morning, saying the Fed is likely to keep its foot on the brake until it sees inflation coming down. He expects policymakers to raise rates by half a percentage point at their next meeting in September, but left the door open to a bigger move. "Fifty [basis points] is a reasonable assessment, but 75 could also be OK," he told reporters."I doubt that more would be called for." A basis point is 0.01 percentage point.
"We wanted to get to neutral expeditiously. We want to get a little restrictive expeditiously," Evans added."We want to see if the real side effects are going to start coming back in line ... or if we have a lot more ahead of us." The rate-setting Federal Open Market Committee does not meet in August, when it will hold its annual symposium in Jackson Hole, Wyoming. It next meets Sept. 20-21.
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