San Francisco Federal Reserve Bank President Mary Daly said she fully supports the decision to hold U.S. interest rates steady in July. However, she noted that high inflation is becoming a more widespread problem and that more aggressive action by monetary authorities may be needed. Daly outlined two scenarios for inflation, explaining that different policy responses would be required depending on whether inflation slows or persistent upward price pressures take hold. At the July FOMC meeting, the U.S. monetary authority decided to keep rates unchanged for the fifth consecutive meeting, but three regional Fed presidents dissented, arguing for a quarter-point rate hike. Daly does not have a vote on the FOMC this year.
Daly supports holding rates, but hints at possible future hikes, which could raise the policy rate.
Potential future rate hikes could push yields up, lowering bond prices.
