Daly, Fed Official: Fed Should Not Rush to Hike Rates in October

In brief: Mary Daly considers further rate hikes likely, but sees no urgency to act at the October meeting. She said gasoline prices are driving overall inflation and that core inflation remains stubbornly high. Daly's stance is more consistent with a rate hike in December than with action in October. Mary Daly, president of the Federal […]

At a glance, Mary Daly saw more interest rate hikes as likely, but saw no urgency for action at the October meeting. Canada's assets from US bonds reached 600 billion dollars; Speculation about China's role at a glance has put Canada's reported holdings of US debt at nearly $600 billion. Some investors believe that Koeda, a member of the Bank of Japan: Do not be too cautious to raise the interest rate. Junko Koeda, a member of the Board of the Bank of Japan (BOJ), said that the bank should not jump to 60 dollars in an overly cautious increase in the interest rate of gold; Is China behind the US bond market? At a glance, gold rose around $60 in Asian trading and the 10-year Treasury bond yield remained at a five-year high after Australia's unemployment rate; The probability of interest rate increase decreased. At a glance, Australian employment decreased by 39,300 people in September; At the same time, the stock market of chip makers fell and concerns about interest rates; A 2% drop in the Nasdaq index of the American stock market was faced with a decrease in value due to a further drop in the shares of semiconductor companies and inflation exceeding expectations. Get informed about the news by subscribing to the YouTube and Times newsletter.

San Francisco Federal Reserve President Mary Daly told Reuters that more interest rate hikes would likely be needed to curb inflation; However, he does not see the need to take action in the meeting on October 27 and 28 and said that there is still time to make a decision. He added that core inflation, as expected, is still stubbornly high.

Dolly's comments were the clearest opposition yet to the increasing possibility of an October rate hike; The possibility that was strengthened after the release of consumer price index (CPI) statistics. This stance can reduce the possibility of a rate hike in the October 27-28 meeting, without destroying expectations for a rate hike in December.

Such a situation may reduce some of the pressure on the short-term side of the Treasury yield curve, while long-term bond yields remain supported by the prospect of rates remaining higher. Because Daly tied headline inflation directly to gasoline prices, oil prices remain the determining factor. A rebound in crude oil prices following the Iran war could test his view that the Fed has time to wait. His comments also differed from the more concerned tone of Austen Goolsby; A reminder that officials may agree on the overall path of monetary policy, but differ on its timing.

Daly said it's more likely than not that more interest rate hikes will be needed to bring down inflation, but he's still weighing the timing. He said he doesn't feel any urgency to make a decision based on limited information and the Fed has the time it needs. In his opinion, a hasty reaction in a situation where there is an opportunity to make a well-considered decision is not wise, and policymakers should proceed carefully and thoughtfully.

Dolly's comments came as September consumer inflation data was released; The statistics showed that annual inflation has reached 3.7%; Above expectations and well above the Fed's 2% target. Daly said the data showed gasoline prices were driving headline inflation, while core inflation -- which strips out volatile food and energy costs -- remained stubbornly high, as he expected. He added that it is not yet clear whether inflation will decrease after the recent shocks subside or will increase if these shocks continue.

Daly said the risk of inflation staying above the target remains high. He added that the stability of the labor market allows the Federal Reserve to focus on price stability. Daly also said he was reassured that markets had calmed down after the initial strong reaction to the CPI report and that investors understood how the Fed would react.

His comments clarify the position of policymakers ahead of this month's meeting. Austin Goolsby, president of the Chicago Federal Reserve, called the CPI figures disappointing on Wednesday and pointed to continued service inflation. The Federal Reserve Beige Book survey also indicated the intensification of price pressures in parts of the country; Pressures stemming from rising diesel costs. The release of the CPI data had raised the possibility of an interest rate hike in the market in October, but Dolly's comments indicated that he would prefer to wait.

In September, the Federal Reserve raised its interest rate target range by 0.25 percentage points to 3.75% to 4% and signaled another hike this year. Most officials have seen December as a more likely time for the next increase than October; Dali's statements are consistent with this view.