Technical Analysis

Fed’s Daly: The time is now to step down on the pace of rate hikes

  • Daly pushing for 50 at the next meeting
Adam Button

Adam Button

Thursday, 10/11/2022 | 16:24 GMT-0

10/11/2022 | 16:24 GMT-0

This is an important comment from Daly because she’s often a mouthpiece for Powell. At the same time, she’s also talking about a higher terminal rate.

  • My own forecast was for Fed funds to peak at 4.90%
  • We will probably need to tighten more than the Sept dots plot suggested
  • We need to mindful of cumulative tightening and the impact on financial conditions
  • My forecast is that inflation is likely above target at the end of 2023
  • Likely some more rate hikes in our future
  • The real conversation should be about the level at which we hold the interest rate
  • About 50% of excess inflation comes from demand, the rest comes from supply

This is in fitting with the Fed pausing somewhere near 5% but with today’s CPI report, the market has shifted the peak to 4.86% from 5.11% last week.

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