EXCLUSIVE: Fed's Daly says rate hikes likely needed, but not urgently
- Mary Daly says more rate hikes are probable, but October is off the table because, you know, thoughtfulness.
- Inflation ticked up to 3.7% thanks to gas prices; underlying data is 'sticky' but not a five-alarm fire — yet.
- Market odds for an October hike jumped to 40% before traders remembered the Fed owns the calendar.
- Daly insists the labor market's stability gives the Fed the luxury of procrastination on price pain.
- 7.5% mortgage rates are already strangling demand, but the Fed's still 'deliberating' like it's a wine tasting.
Brief Summary
San Francisco Fed chief Mary Daly has delivered the monetary policy equivalent of a shrug: yes, we'll probably hike rates again, but no, not at the next meeting, because 'we have time.' The CPI report showed inflation accelerating to 3.7%, driven by gasoline, but Daly is cool as a cucumber, insisting risks aren't realities. She's betting on the labor market's resilience to buy the Fed more time to ruminate, while mortgage rates hit 7.5% and crush demand. Investors briefly panicked, then remembered the Fed's reaction function runs on 'deliberative' time, not market panic time. So, the rate-hike train stays at the station, at least until November — when they'll likely invent a new excuse to delay again.
Why This Matters
This is the Fed's classic 'kick the can down the road' routine, and your wallet's the pothole. The good news? No immediate hike in October means borrowing costs won't spike just yet, so your credit card and auto loan interest rates might hold steady a bit longer. The bad news? 'We have time' is code for 'we'll squeeze you later,' and when that hike lands, it'll land hard. For anyone eyeing a mortgage, the 7.5% rate is already a polite way of saying 'stay renting,' and Daly's patience just means you're stuck in purgatory. The labor market's stability is the only thing saving your savings account, but if inflation stays sticky, that stability is a mirage. Bottom line: the Fed's deliberation is your procrastination on financial planning — start acting now, because their 'thoughtful' pace won't spare your budget.