Fed Dove Daly Joins Officials Open to 75 Basis-Point July Hike

Another Federal Reserve official has lined up with those who favor following last week’s 75 basis-point interest-rate increase with the same again next month to curb rampant inflation.

“Seventy-five in July is where I’m starting because I think that right now, that looks like what we’ll need to do,” Federal Reserve Bank of San Francisco President Mary Daly told reporters Friday following a speech in Orange, California. “But I’ll be watching to see any signs that we are less sure about the tightening level that’s already taking place.”

The central bank, which raised interest rates by 75 basis points this month in an effort to stem the fastest price gains in 40 years, has put policy on an “expeditious path” by the end of the year to neutral, the rough level that neither speeds nor slows the economy.

Additional tightening beyond that is likely the next step, Daly said during her prepared remarks at a conference, hosted by the Shadow Open Market Committee, a group of Fed watchers.

“How much additional tightening will be required depends on a number of factors that fall outside of the Fed’s direct control, including the speed and magnitude of supply chain recovery, the duration of the war in Ukraine, and the willingness of individuals who have left the labor force to reenter,” Daly said.

Daly joins a growing band of officials, including policy makers previously on the dovish wing of the central bank, who’ve either declared in favor of raising by 75 basis points next month or said they’re open to do that, or a smaller 50 basis-point move as they seek to cool spiraling prices.

These include Governors Christopher Waller and Michelle Bowman, who both back the larger move, and regional presidents including Chicago’s Charles Evans, Neel Kashkari in Minneapolis and Philadelphia’s Patrick Harker.