Fed’s Daly sees more rate hikes as firms seek to pass on costs

San Francisco Federal Reserve (Fed) President Mary C. Daly said on Friday that the US economy is good, but the "key problem" is inflation, adding that the “bias is that rates need to go up.”

Daly added that “in all likelihood we will need to raise rates,” commented that it is hard to say whether monetary policy is restrictive enough and that producers are saying that “they want to pass on costs.”

Key takeaways:

Key problem we have is inflation.

A good economy with one problem, inflation.

Employment broad-based, we're seeing manufacturing resurgence.

There is little evidence yet that higher productivity AI-driven.

Other tech is being used to do more with fewer workers.

Overlapping shocks changed underlying rate of inflation.

Bias is that rates need to go up.

Markets understand Fed's reaction function.

In all likelihood we will need to raise rates.

Hard to say policy is restrictive enough.

A myriad of things are pushing up inflation, which makes it concerning.

More producers saying they want to pass on costs.

Consumer spending surprisingly resilient.

I'm looking at how the gap between consumer sentiment and behavior gets closed.

I wouldn't spend a lot of time on the Summary of Economic Projections; it's just a point in time.

FOMC must be transparent, accountable and clear

Watching services ex-housing inflation carefully, it's not moving in the right direction

Businesses are cautiously optimistic, but everyone is worried about inflation.

TMGM талдауы: Қаржы нарығы жаңалықтары, экономикалық күнтізбе және нарықтық шолулар

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.25%	0.23%	0.02%	0.05%	0.43%	0.39%	0.49%
EUR	-0.25%		-0.03%	-0.25%	-0.19%	0.17%	0.15%	0.24%
GBP	-0.23%	0.03%		-0.23%	-0.16%	0.20%	0.17%	0.27%
JPY	-0.02%	0.25%	0.23%		0.05%	0.42%	0.37%	0.48%
CAD	-0.05%	0.19%	0.16%	-0.05%		0.37%	0.33%	0.44%
AUD	-0.43%	-0.17%	-0.20%	-0.42%	-0.37%		-0.03%	0.07%
NZD	-0.39%	-0.15%	-0.17%	-0.37%	-0.33%	0.03%		0.11%
CHF	-0.49%	-0.24%	-0.27%	-0.48%	-0.44%	-0.07%	-0.11%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

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