Fed’s Daly sees rates rising above 4.5% next year to cool prices

Federal Reserve Bank of San Francisco President Mary Daly said she expects the central bank to keep raising its benchmark rate in coming months and holding it there following a fresh inflation reading that she called “very disappointing.”

Daly, speaking Friday in a video interview with Yahoo Finance, said she’s “very supportive” of continuing to increase rates to restrictive levels.

“We are not on some sort of course that can’t correct if the economy needs more bridling or needs less bridling,” Daly said.

But increasing rates to between 4.5% and 5% “is the most likely outcome,” with the Fed then planning to “hold at that point for some period of time,” she said.

The Fed’s main rate is currently in a range of 3% to 3.25%.

Daly and other Fed officials are reacting to the latest bout of bad U.S. inflation news, which showed a core measure of prices rising the most in 40 years.

Some economists expect central bankers to once again raise their outlook for how high they’ll have to lift interest rates.