Daly backs further rate increases despite technology-stock selloff

San Francisco Federal Reserve President Mary Daly said in a CNBC interview Friday that further increases in the Fed's benchmark interest rate—the policy rate that influences borrowing costs across the economy—were likely to be needed to fight inflation. She backed further increases despite a painful decline in technology stocks.^[1][2]

Daly called Friday's jobs report good news for American workers, while saying their wages were not keeping up with inflation.^[1]

Daly's stance indicates that falling technology shares have not removed her support for further rate increases. If the Fed raises rates again, businesses could face higher borrowing and refinancing costs; investors would also use higher rates to value future profits, putting pressure on stocks whose value depends heavily on distant growth.^[2][1]

On November 6, the two-year Treasury yield rose 0.05 percentage point from the previous session to 4.51%, while the 10-year rose 0.02 percentage point to 4.86%. These yields are important reference points for lending and stock valuations. Separately, wages trailing inflation squeeze household purchasing power, potentially limiting sales growth for businesses selling discretionary goods and services.^[1]

Impact

What to watch next

• October core CPI, which excludes food and energy prices, is due November 10 and will test the case for further rate increases. The monthly estimate is 0.2%, down from 0.3% previously; a stronger reading would reinforce Daly's inflation concern.