San Francisco Federal Reserve President Mary Daly said on Friday, November 13, that the U.S. central bank will likely need to raise interest rates further, becoming the latest senior Fed official this week to warn that persistent inflation leaves policymakers little choice. “My expectation is we're going to have to tighten policy further. Exactly when and how much is still to be decided because we just have to take all the variables that are coming in,” Daly told CNBC's Steve Liesman in a live interview. “More is likely to be needed, and certainly … I'm prepared to do that if that's what the economy calls for.”
Source: CNBC via The Rundown
Her remarks landed the same day the Bureau of Labor Statistics reported that the U.S. economy added 165,000 jobs in October — nearly triple the Dow Jones consensus estimate — while the unemployment rate edged lower to 4.1%. Average hourly earnings rose 3.1% over the year in October, but that still trailed the September consumer price inflation rate of 3.7%, meaning pay is not keeping up with prices for many workers.
Three senior officials, one message
New York Fed President John Williams struck the same note on Thursday evening at an event in New York. “Inflation is far too high and it continues to be high even in the latest data,” Williams said. “We'll need to take actions over time that will ensure that we get inflation back to our 2% goal promptly and on a sustained basis.” Williams said the overall economy does not seem out of balance: “The US economy not only continues to grow, but actually seems to be strengthening. We're seeing that also in the labour market. But we're not seeing signs of the economy overheating.”
Source: CNBC-TV18
Fed Governor Christopher Waller, speaking on November 10 at the Bank of England Watchers Conference in London, was blunter still, saying September's inflation figures were bad with no silver lining. The Personal Consumption Expenditures (PCE) price index — the Fed's preferred gauge — rose 0.5% in the month and 3.7% over the year, while core PCE rose 0.3% in September and 3.1% year over year. Waller said he would support a 25-basis-point hike at the Fed's December meeting even if the October inflation data, released the same day as his speech, showed some improvement.
Source: SchiffGold summary of Waller speech
Richmond Fed President Thomas Barkin added his voice on Thursday, saying he also sees higher rates ahead but is unsure of the timeline. Daly, who will vote on the rate-setting committee next year, said she still favours a gradual approach: she supported the September hike and also backed holding rates at the most recent meeting because “the world is filled with uncertainty.”
How the Fed got here
The Federal Open Market Committee raised its benchmark rate by a quarter point in September — its first increase in three years — to a target range of 3.75%–4%, then held last month to await clearer data. The data since then have not given the committee the all-clear: Tuesday's inflation report showed underlying consumer prices, excluding food and energy, rose 0.3% in October from the prior month, topping estimates for a third straight month. Interest-rate futures now suggest investors expect quarter-point increases at each of the next three meetings, in December, January and March.
Waller filled in the other side of the picture in London. Real GDP grew at an initial estimate of 3.4% in the third quarter, lifted by consumer spending and business investment in AI-related high-tech equipment. But the labour market has settled into what he called a “low hire, low fire” pattern that has persisted for more than a year, and the share of long-term unemployed — those out of work for 27 weeks or more — has climbed from about 18% at the end of 2022 to more than 27% through September, with young and new workforce entrants struggling disproportionately.
Vice Chair for Supervision Michelle Bowman, speaking at the Council on Foreign Relations on November 10, added a breakdown of what is driving prices: she estimated that tariffs, energy and AI-related price pressures each accounted for roughly one-fourth of above-target core PCE inflation over the 12 months ending in September, and that today's consumer price data suggested 12-month core PCE inflation likely moved up further to 3.3% in October. Bringing inflation closer to 2% remains the priority, she said.
The FOMC meets in December. After Friday's producer price report from the Labor Department — a 0.3% October rise and a 6.5% annual jump, the largest since November 2022 (Reuters) — markets are wavering between pricing in a 25-basis-point December hike and leaving room for a half-point move, with another increase anticipated in January, according to CME's FedWatch tool.
Daly put the human cost plainly: households are on a “treadmill of high inflation” that has now run for almost six years, and real wages are falling because pay is not keeping up. “The job market remains stable and solid, but not booming,” she said. For borrowers — including Punjabi truckers financing rigs, small business owners and families carrying mortgages across the United States — the message from this week's chorus of Fed voices is that the era of expensive money is not ending yet, and the next decisions land in December.