Fed Officials Say More Rate Hikes Are Likely as October CPI Is Expected to Cool

San Francisco Federal Reserve President Mary Daly said Friday that the central bank will likely need to raise interest rates further as it fights inflation that has outpaced wage growth, comments that arrived just days before Tuesday’s October consumer price report. In a live interview with CNBC’s Steve Liesman, Daly said, “My expectation is we’re going to have to tighten policy further. Exactly when and how much is still to be decided because we just have to take all the variables that are coming in.” She added that “more is likely to be needed” and that she was prepared to support additional tightening “if that’s what the economy calls for.” CNBC and Reuters both reported the remarks.

The interview came the same day the Bureau of Labor Statistics said U.S. employers added 165,000 jobs in October and that the unemployment rate edged down to 4.1%, figures CNBC described as substantially stronger than Wall Street forecasts and nearly triple the Dow Jones consensus estimate for payrolls. Daly called the report “good news for American workers” while noting that pay has not kept up with prices. Average hourly earnings rose 3.1% from a year earlier in October, she and CNBC said, compared with a 3.7% year-over-year increase in the consumer price index in September.

Households on a “treadmill of high inflation”

“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,” Daly said, according to CNBC. “This has been high for too long, almost six years, and we’re really starting to feel the burden of that spread everywhere.” She said the labor market “remains stable and solid, but not booming,” and that “you see real wages falling because those wages are not really keeping up with inflation.” Reuters reported that she also described the recent slide in technology stocks as a “painful” but orderly repricing as investors reassess risks to artificial-intelligence-driven demand.

The Federal Open Market Committee raised its benchmark overnight rate by a quarter percentage point in September, to a target range of 3.75% to 4.00%, CNBC reported. At its subsequent meeting, the committee left that range unchanged and said it wanted “the accumulation of more information” before deciding its next move. Daly, who CNBC said will vote on the committee next year, said she supported both the September increase and the later decision to hold, and that she still favors a gradual approach. Richmond Fed President Thomas Barkin also sees higher rates ahead but has not specified a timeline, CNBC said.

Musalem and market odds for December

In comments at a St. Louis civic event Friday, St. Louis Fed President Alberto Musalem said inflation remained the top concern in his conversations with businesses in his district, according to a Reuters report carried by The Korea Herald. “Inflation is a regressive tax, a distortionary tax,” Musalem said. “The best thing we can do for growth and employment is bring inflation back down on a timely basis.” He said artificial-intelligence investment was adding to inflation through demand for commodities such as copper and that “we need to make monetary policy for the economy of the day, not what it may be five years from now.”

Reuters said markets were pricing about an 80% chance of a quarter-point increase at the Fed’s Dec. 8–9 meeting, up from about 67% on Thursday, after the stronger jobs report. Traders also brought forward the timing they assign to a subsequent increase, to April rather than June, the report said, as inflation has run above the Fed’s 2% target for more than five years. Reuters identified Kevin Warsh as Fed chairman and said he had told policymakers after last month’s hold that they would watch “the accumulation of data.” Olu Sonola of Fitch Ratings, quoted by Reuters, called the employment report “very strong” and said it “pushes the policy debate further toward a December rate hike,” while noting that recent concern over artificial intelligence remains a risk to the outlook.

October CPI due Tuesday

The next major inflation reading is Tuesday’s October CPI release from the BLS. A Bloomberg survey of economists, reported by Business Standard on Sunday, Nov. 8, put the median forecast for the headline index at a 0.3% monthly increase after a 0.6% rise that was the largest since April. The core measure, which excludes food and energy, was seen rising 0.2%, which would be the smallest advance in three months. Bloomberg said the BLS will not publish year-over-year figures because it skipped the October 2025 CPI release during a federal government shutdown.

Bloomberg Economics economists Anna Wong, Troy Durie and Eliza Winger wrote that they expect headline CPI slowed to 0.25% in October from 0.65% previously, and core to 0.24% from 0.33%, with softer goods and services inflation, including slower price gains for used cars and consumer electronics and a cooling in owners’ equivalent rent after a September spike. Citigroup economists, cited by Bloomberg, anticipated limited pass-through of high energy costs into goods prices and moderate services inflation. Another price report due Friday, the producer price index, is projected to show a 6.6% increase for the year through October, which Bloomberg said would be the steepest annual gain in nearly four years.

The October CPI will be the last consumer-price report before the December policy meeting. The figures, like Friday’s jobs data, will not by themselves determine the path of interest rates. Daly told CNBC that officials still need to collect more information and move deliberately, given what she described as a volatile world.

Sources: CNBC, Nov. 6, 2026; Reuters via Investing.com, Nov. 6, 2026; Reuters via The Korea Herald, Nov. 8, 2026; Bloomberg via Business Standard, Nov. 8, 2026.