Mixed Comments From Daly

Speaking on CNN, SF Fed's Daly ('24 voter) gave somewhat mixed comments compared to most recent remarks made on Aug 11, being perhaps slightly more open to a 75bp hike in Sept but potentially more dovish further out depending on interpretation of "a little". Those prior comments were after the US CPI miss, with the main developments since then being a miss for import prices, Empire Fed and NAHB/housing starts, but some upside surprise from IP and retail sales. Fed Funds implied hikes hover near the day's lows with 60.5bps priced for Sept and a cumulative 133bps to 3.66% in Mar'23.

• Views on Sept FOMC: 50 or 75bp reasonable –- vs comments from Aug 11 (i.e. post US CPI miss) that 50bp was a base case but open-minded on whether 75bp is needed should data evolve differently. Latest comments supported by FOOD, HEALTH CARE COSTS STILL RISING, RENTS HIGH (BBG) and repeating TOO EARLY TO DECLARE VICTORY ON INFLATION (BBG)
• Year-end: FAVORS RAISING FED RATES TO A LITTLE ABOVE 3% BY YEAR END (BBG) – vs more explicitly stating 3.4% for year-end, which has been her baseline since the Jul FOMC.
• Beyond: MAY NEED TO GO HIGHER THAN THAT, DEPENDS ON DATA (BBG) vs SEES MORE RESTRICTIVE POLICY NEXT YEAR TO CURB INFLATION (BBG)
• Other comments of note: [RTRS] - FED'S DALY: DON'T WANT TO OVERDO POLICY AND FIND WE'VE TIGHTENED ECONOMY MORE THAN NECESSARY, in line with mention in the July FOMC minutes of "many officials seeing risk that the Fed could tighten more than necessary".