Fed Daly says high inflation treadmill likely prompts more rate hikes
ITF Team3 min read
San Francisco Fed President Mary Daly warned on 11/6/2026 that persistent inflation may require further rate hikes after a strong jobs report showed 165,000 new jobs and a 4.1% unemployment rate.
Key takeaways
- Mary Daly said on 11/6/2026 that more interest‑rate tightening is likely as inflation remains high.
- The U.S. added 165,000 jobs in October 2026, far above expectations, while unemployment slipped to 4.1%.
- Average hourly earnings rose 3.1% YoY in October 2026, still below the 3.7% CPI inflation rate.
- The Fed’s benchmark rate sits at 3.75‑4.0% after a September 2026 quarter‑point hike, with the next move still uncertain.
San Francisco Federal Reserve President Mary Daly told CNBC on 11/6/2026 that the central bank will probably need to raise its benchmark interest rate again as the United States continues to wrestle with six years of elevated inflation. Her remarks came after the Bureau of Labor Statistics released a surprisingly strong October jobs report, showing 165,000 new jobs and a dip in the unemployment rate to 4.1%.
Daly called the employment data “good news for American workers,” but she stressed that wages are still lagging behind price growth. Average hourly earnings rose 3.1% year‑over‑year in October, while the consumer price index for September was running at a 3.7% annual pace. The gap means real wages are falling, putting pressure on household finances.
Why the Fed may keep tightening
The Fed’s primary tool for curbing inflation is the federal funds rate. Higher rates increase borrowing costs, dampen demand, and ultimately reduce price pressures. Daly highlighted that the policy path remains “uncertain” because the committee must weigh a range of variables, including labor‑market strength, wage growth, and the persistence of inflation.
Even though the job market is solid, Daly warned that it is not “booming,” and the continued mismatch between earnings and prices could keep inflation sticky. Her comments echo those of other policymakers, such as Richmond Fed President Thomas Barkin, who also sees higher rates ahead but cannot pinpoint the timing.
Market reaction and price levels
Following Daly’s interview, the U.S. dollar index edged higher against a basket of major currencies, reflecting expectations of tighter policy. Treasury yields rose modestly, with the 10‑year note climbing to around 4.6%, a level that often signals market anticipation of further rate hikes.
Gold (XAU/USD) slipped below $1,950 per ounce as real yields edged up, illustrating the classic inverse relationship between precious metals and higher interest rates. Traders are watching the 2,000‑ounce psychological barrier, while the dollar‑yen pair (USD/JPY) tested the 150.00 level, a key resistance tied to past Fed tightening cycles.
Read also: Treasury cuts MEXC off US financial system after $16 billion illicit flow
Context of the September rate decision
In September 2026, the Federal Open Market Committee raised the target range for the federal funds rate by 0.25 percentage point to 3.75‑4.00%. The move was intended to bring inflation back toward the 2% goal after a prolonged period of price acceleration.
The committee then paused in its November meeting, opting to “accumulate more information” before deciding on the next step. Daly’s latest comments suggest that the pause may be temporary if inflation data remain stubborn.
What traders should monitor
Key data releases in the coming weeks include the November CPI report, expected in mid‑December, and the November jobs numbers, which will test whether the labor market remains resilient. A surprise uptick in inflation could accelerate the Fed’s timeline for another hike.
Geopolitical developments, especially commodity price shocks, could also feed into U.S. inflation. Market participants should keep an eye on the 3.75‑4.00% policy range, the 4.6% 10‑year Treasury yield, and the 150.00 level on USD/JPY for clues about future moves.
- Watch the November CPI release (expected early Dec 2026)
- Monitor November non‑farm payrolls for labor‑market strength
- Track 10‑year Treasury yields for real‑rate shifts
- Follow USD/JPY around 150.00 and XAU/USD near $2,000
Frequently asked questions
What did Mary Daly say about future Fed rate hikes?
On 11/6/2026 Daly told CNBC that she expects the Fed will need to tighten policy further, though the exact timing and size of any additional hike remain uncertain.
How did the October jobs report compare to expectations?
The report showed 165,000 jobs added in October 2026 and unemployment falling to 4.1%, both well above Wall Street forecasts and the Dow Jones consensus estimate.
Official data sources
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This article is compiled from international market news for information only. It is not investment advice.