Fed's Daly Says More Rate Hikes Likely as Inflation Persists

Federal Reserve official Mary Daly said Americans remain stuck on a "treadmill of high inflation" and that further interest rate hikes are likely, adding to a chorus of central bank officials signalling tighter policy ahead. Daly's remarks, reported by CNBC, came as she characterised the inflation problem as persistent rather than transitory, suggesting the Fed is not yet ready to pause its tightening campaign.

Her comments were echoed by Thomas Barkin, who said he sees interest rate hikes ahead but at a gradual pace, according to CNBC. Together, the two officials point to a Federal Reserve that intends to keep raising borrowing costs, though potentially in smaller increments than earlier in the cycle.

The messaging lands against a labour market that continues to defy expectations. US job growth exceeded forecasts in October, with The Guardian describing a "low-hire, low-fire" environment in which hiring has slowed but layoffs remain scarce. That resilience complicates the inflation outlook and reinforces the case for further tightening, with an interest rate hike expected in December.

For investors, the signal is that the cost of capital is unlikely to fall soon. Rate-sensitive assets, from long-duration equities to bonds, face continued pressure as policymakers prioritise bringing inflation down over supporting growth. The gradual pace indicated by Barkin suggests officials are mindful of over-tightening, but Daly's warning that households remain on an inflation treadmill underscores how far the Fed believes it still has to go.