Federal Reserve signals further interest rate hikes to combat inflation

“They see that they can get jobs, they continue to spend. They’re not out of the game, but they are on a treadmill of high inflation,” she said. “This has been high for too long, almost six years, and we’re really starting to feel the burden of that spread everywhere.”

Daly expressed concern about the ongoing nature of inflation, despite a stable labor market. She noted that real wages are declining as they fail to keep pace with rising prices. “The job market remains stable and solid, but not booming, and you see real wages falling because those wages are not really keeping up with inflation,” Daly said.

The Federal Open Market Committee raised the benchmark overnight borrowing rate by a quarter percentage point in September, bringing the target range to 3.75%-4%.

However, the committee recently paused further rate hikes, opting to gather more data before making future decisions.

Daly, who will serve as a voting member next year, supports a measured approach to monetary policy. Richmond Fed President Thomas Barkin also indicated that he anticipates further rate increases, though the timing remains uncertain. “I was really supportive and completely thought that that was the right move to move in September,” Daly said. “I also think that it was good to be on hold at the last meeting because the world is filled with uncertainty.”