Fed’s Daly says US inflation could get worse before it gets better

San Francisco Federal Reserve Bank President Mary Daly poses at the bank’s headquarters in San Francisco, California, US, July 16, 2019. REUTERS / Ann Saphir

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WASHINGTON, Feb 8 (Reuters) – High US inflation may get even higher before subsidizing in the face of Federal Reserve action and as supply chain strains recede, San Francisco Federal Reserve Bank President Mary Daly said on Tuesday.

“We could have it worse before it gets better but it’s definitely going to get better,” Daly told CNN, adding that even so she does not expect inflation to have fallen to 2% by the end of the year. Consumer prices rose 7% last year, eating into American paychecks.

The Fed is expected to start raising interest rates from near-zero levels next month, a move Daly said she supports. When it does, Daly said, the Fed should do neither too little nor be “overly aggressive,” mindful that the Fed alone can not cure inflation that’s caused in large part by ongoing pandemic disruption.

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Reporting by Eric Beech; Editing by Sandra Maler

Our Standards: The Thomson Reuters Trust Principles.

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