Mary Daly, President of the San Francisco Federal Reserve, stated that the central bank may need to raise interest rates further, although the specifics regarding timing and magnitude remain uncertain.
During an interview, she highlighted the recent Bureau of Labor Statistics report showing the U.S. economy added 165,000 jobs in October, with the unemployment rate decreasing to 4.1%, which exceeded Wall Street expectations.
Despite this positive job growth, Daly expressed concern over inflation's impact on household finances, noting that average hourly earnings increased by only 3.1% annually, while inflation was measured at 3.7% in September. She described the situation as Americans being on a 'treadmill of high inflation,' where job availability does not translate into real wage growth.
Daly emphasized that while the job market is stable, real wages are declining as they do not keep up with inflation. The Federal Open Market Committee had recently raised the benchmark overnight borrowing rate to a target range of 3.75%-4%, but opted to pause further hikes to gather more information.
Daly, who will vote on the committee next year, supports a gradual approach to rate adjustments, reflecting the uncertainty in the current economic landscape