News

Uncertainty Remains as Fed Considers Interest Rates

4.6

Andrew R. Michaud

November 10, 2023

San Francisco Federal Reserve President, Mary Daly, expressed doubt on whether the central bank has sufficiently raised interest rates to bring inflation down to the 2% target. Speaking in an interview on CNBC, Daly admitted that she wasn't yet sure if rates were "sufficiently restrictive" to achieve this goal.

Despite the demand for certainty from the markets, Daly emphasized that the truth was that they simply didn't know yet. However, she reassured that the Fed's current policy was in a strong position, allowing them to react and adapt to the evolving economy.

Daly stressed the importance of being ready to raise interest rates or halt monetary tightening, depending on the economic data. Comparing it to being in a "ready position" in sports, she acknowledged that this could be confusing for some. Nonetheless, she highlighted that the Fed would take into consideration a constellation of data, including anecdotal evidence rather than relying on a single or just a couple of reports.

During its recent meeting, the Fed decided to leave interest rates unchanged within a range of 5.25% to 5.5%. The central bank's economic forecast had initially predicted another rate hike, but traders in derivative markets now see only a slim chance of a move in December. Instead, they anticipate a higher possibility of an interest-rate increase in early 202X.

As the central bank evaluates its options, stocks experienced an upward trend on Friday, coinciding with a rise in the 10-year Treasury yield to 4.64%.