Fed official says too early to ‘declare victory’ on inflation fight

Logo of the US Federal Reserve

San Francisco Federal Reserve President Mary Daly warned it is far too early for the US central bank to “declare victory” in its fight against elevated inflation.

In an interview with Financial Times, Daly did not rule out a third consecutive 75-basis-point interest rate hike at the Fed’s next monetary policy meeting in Sept. However, she signaled her initial support for the central bank to slow the pace of rate increases. 

Her remarks came after yesterday's official data showed that US inflation slowed in July. Daly, on the other hand, indicated that inflation is still very high, “not near the Fed’s price stability goal.”

Daly noted that the Fed has already amplified monetary policy significantly, the full effects of which have not yet trickled through the economy. Other central banks worldwide, meanwhile, are also rapidly raising interest rates in a “synchronized” manner to an extent that has dramatically tightened global financial conditions, albeit growth prospects across developed and emerging economies are still sour, she added.