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San Francisco Federal Reserve Bank President Mary Daly said Sunday that the U.S. central bank will “absolutely” raise interest rates by half a percent in September to try to reduce red-hot inflation.
Daly appeared on CBS’ “Face the Nation,” saying Americans are struggling as inflation hits 9.1 percent, the highest since 1981, while wage growth isn’t picking up as fast fast
“Americans are losing ground every day, so the focus has to be on reducing inflation,” Daly said.
The potential rate hike comes as the US economy teeters on the brink of recession.
FED’S MARY DALY SAYS NOT INFLATION BECAUSE ‘I HAVE ENOUGH’, ADDS ‘THIS IS NOT THE CASE’ FOR OTHERS
Mary Daly, president of the Federal Reserve Bank of San Francisco, promised struggling Americans that the Fed was “far from done” working to reduce inflation. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
The Commerce Department reported last week that GDP shrank 0.9% in the second quarter after falling 1.9% in the first three months of the year.
However, Daly said she does not see inflation being embedded in the economy, which she said has shown signs of cooling.
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The ‘Kennedy’ panelists discuss the Fed raising interest rates again to fight inflation and the likelihood of a recession.
“What I see is that supply and demand are out of balance. About 50%, by my own staff estimates, of the excess inflation we see is demand-related, the other 50% with the offer,” he said.
Daly said he believes the Fed is in a great position to reduce demand and that they are already seeing signs of cooling in the housing market and investment.
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“So I see signs that the economy is cooling, it’s just going to take some time for the interest rate adjustments we’ve made to work,” Daly said. “And we’re far from done, that’s our promise to the American people.”