San Francisco Fed's Mary Daly signals more hikes ahead after strong October jobs data

What Daly said in the interview

Speaking live with CNBC's Steve Liesman on Friday, Mary Daly said her baseline is that policy will need to tighten further, while the when and how much depend on incoming data. In her words: "More is likely to be needed, and certainly ... I'm prepared to do that if that's what the economy calls for."

She backed the Federal Open Market Committee's quarter-point hike in September to a 3.75% to 4% target range and said keeping rates unchanged at the most recent meeting was appropriate given uncertainty. Daly said she still prefers moving in measured steps. She votes on the FOMC next year.

The jobs and inflation picture she is weighing

The Bureau of Labor Statistics reported 165,000 jobs added in October, with the jobless rate easing to 4.1%, a metric Fed officials watch closely. The print topped Wall Street projections by a substantial margin, with job creation coming in at close to three times the Dow Jones consensus.

Daly called the report "good news for American workers," but pointed to inflation's squeeze. Average hourly earnings climbed 3.1% year over year in October, while September's consumer price index stood at 3.7%. "They see that they can get jobs, they continue to spend. They're not out of the game, but they are on a treadmill of high inflation," she said, adding that it "has been high for too long, almost six years," and its burden is now widespread.

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The policy setup

After lifting rates in September, the Fed opted last week to hold steady, saying it would wait for "the accumulation of more information" before choosing its next step. Daly said she is not broadly worried about growth but is focused on how persistent inflation has been.

"The job market remains stable and solid, but not booming, and you see real wages falling because those wages are not really keeping up with inflation," she said. Her Richmond colleague, Thomas Barkin, said Thursday he also anticipates higher rates but is uncertain about timing.

Why it matters for your portfolio

Stronger hiring alongside inflation running above wage growth keeps the door open to additional tightening, and officials are signaling a cautious, data-dependent path. That mix can keep yields and rate-sensitive assets in flux as each report lands.

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