Fed’s Daly signals 2 further rate hikes this year

Commenting on the Federal Reserve’s policy outlook, “we’re likely to need a couple more rate hikes over the course of this year to really bring inflation sustainably back to the Fed’s 2% goal,” San Francisco Fed President Mary Daly said on Monday.

The US Dollar Index stays on the back foot in the American session on Monday and was last seen losing 0.2% on the day at 102.06.

The dollar is facing the difficult mission to stay resilient against rival currencies in the second half of the day despite having started the week on a bullish note.

The Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations showed on Monday that the US consumers’ one-year inflation expectation dropped to the lowest level since April 2021 at 3.8% in June from 4.1% in May.

Fed’s Loretta Mester said that the Fed will need to tighten the policy “somewhat further” to lower inflation, causing the dollar to lose interest during the US trading session.

Additional Quotes By Daly

“US economic momentum continues to surprise. In context of that momentum, there’s more we need to do to raise rates.”

“We also need to balance against risks.”

“The risks have become more balanced.”

“With labor market still strong, inflation high, risks of doing too little are outweighing risks of doing too much.”

“It’s appropriate to slow the pace of rate hikes.”

“We need to be resolute, and thoughtful.”

“There are longer lags than we assumed.”

“It’s too early to declare victory on getting demand in balance with supply.”

“We may end up doing less or more than a couple rate hikes this year, depending on the data.”

“One lesson learned from last cycle is that fed could raise rates even if balance sheet still expanding.”

“Credit tightening from March banking stresses is probably less than the quarter-point to 50 bps rate hike I have thought.”