San Francisco Fed president: Getting inflation down is ‘number one priority’

75 basis point increase is 'projected path' in July, recession is not 'likely,' Mary Daly exclusively tells FOX Business

As the Federal Reserve raised its benchmark interest rate by 75 basis points for the first time in nearly three decades at its latest meeting, San Francisco Federal Reserve President Mary Daly forecasted that recession is "not the most likely outcome."

"Getting inflation down is the number one priority right now," Daly told FOX Business’ Edward Lawrence in an exclusive interview. 

"I see us doing that with some slowing in GDP, some slowing in the labor market… It's going to be a welcome relief to people who have jobs and are watching their disposable income erode because of inflation."

Daly predicted the U.S. economy will go through a "smooth transition" from "extraordinary pandemic support" to an economy that’s "sustainable in the long run."


Meanwhile, Federal Reserve Chairman Jerome Powell told reports that policymakers will consider another 75 basis point increase in July as they continue their fight to bring down red-hot inflation. 

The San Francisco Federal Reserve president agreed that inflation is "unsustainably high," but a 75 basis point increase is the "projected path."

"The data right now point to the 75 basis point increase in the July meeting is being the next obvious step. But I'm open to 50 or 75 depending on what the data bring, and the important thing is we need to march toward a more neutral stance so that we are not adding support to an economy that can grow easily on its own."

When FOX Business’ Edward Lawrence asked if the 3% GDP federal funds rate would be enough to bring inflation back in check, she responded: "It’s enough to get us started."

"Only about 50% of the high inflation we're seeing really can be traced back to demand, excess demand. The other is about supply chains and those are caused by not only the ongoing COVID disruptions in Asia in particular, but also the war in Ukraine," Daly explained. 

"I'll be watching those very closely to see if they cooperate and ease up so that we can get a little bit of relief on the supply side. Otherwise, we will have to do more than we've currently penciled in."

The San Francisco Federal Reserve president anticipates that inflation will start to "come down this year."


"We have to see that happening or we know we need to do more… then by the end of 2023, I see it coming back down… and then continuing to move toward our target. But really I'm looking for getting some relief for American households and businesses this year."