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Fed's Mary Daly forecasts more interest rate hikes to beat inflation

Yahoo Finance reporter Jen Schonberger details the latest comments about inflation and rate hikes from San Francisco Federal Reserve Bank President Mary Daly.

Video transcript

DAVE BRIGGS: Let's get you up to speed now with the Fed still a month out from the early November meeting. But we got some more insight from Fed officials today. Jen Schonberger has the latest. And Jen, it would appear the markets are not listening to the continued resolve of the Fed.

JENNIFER SCHONBERGER: That is correct, Dave. We heard from Phillip Jefferson, a new addition to the Federal Reserve Board. And that governor making his first official public remarks, saying that the Fed remains resolute in trying to bring inflation back down to the Fed's 2% target, though he says it's going to take some time to bring inflation down from these 40-year highs. And in that process, it will likely mean that the economy will slow.

Now, Jefferson says he's most concerned about fluctuations in prices of items people pay the closest attention to, namely like food and housing, and how that could influence future inflation expectations, though he notes that long-term inflation expectations remain in line with the Fed's goal of 2%.

Now, separately, San Francisco Fed President Mary Daly spoke just about a half hour ago in New York, where she said she doesn't think that the present inflation situation is reminiscent of the 1970s, given where long-term inflation expectations are, though she noted that the Fed does need to remain diligent in bringing inflation back down. Take a listen.

MARY DALY: Despite the concerns-- and I think it's useful to continue to watch-- it hasn't bled into longer run inflation expectations, not of consumers, not of businesses, not of market participants, which means we don't have ourselves in a 1970s and '80s position, where we've lost inflation psychology. Now we can't be complacent, but so far, we haven't lost it.

JENNIFER SCHONBERGER: Now, Daly said she's also encouraged by that 10% drop in job openings that we saw from the JOLTS survey in August from earlier this morning. She says that she expects more of a drop off to come in that vein. And this is one way to slow the job market and get it back into balance without experiencing outright layoffs.

Now, Daly also said that she thinks that quantitative easing amounts to about one to two Federal Reserve rate hikes. She thinks that some of that has already been priced in, though she says the Fed will need to take QT into account in trying to determine where that peak rate is on the Fed's benchmark interest rate. Guys.

DAVE BRIGGS: Great stuff. Jen Schonberger with the latest from the Fed. Thanks so much.