San Francisco Fed President Daly: Fed Will "In All Likelihood" Need to Raise Rates as Services Inflation Moves the Wrong Way

• Dispatched: Nov 14, 2026 · 07:41 ET (12:41 UTC)

One-sentence summary: San Francisco Fed President Mary Daly said on November 13 in Las Vegas that the Federal Reserve will "in all likelihood" need to raise its policy rate, with services inflation excluding housing moving in the wrong direction and producers running out of room to absorb costs — her second public statement in a week, and markedly firmer than the day before.

Verification status: ✓ Reuters original reporting of a public speech

Core Facts & Consensus Delta:

Daly spoke at the University of Nevada, Las Vegas Center for Business and Economic Research forecast event at 12:00 ET / 17:00 UTC on November 13, 2026, and Reuters reported her remarks at 13:42 ET / 18:42 UTC the same day. Her words: "We're going to need to, in all likelihood, raise rates; I will deliberate this with my colleagues in December at our meeting and in all future meetings and make the collective decision that we judge is most appropriate for the economy that is evolving." She stated plainly that her bias is that the central bank will need to increase its policy rate.

Three quantitative anchors support her judgment. First, core CPI has risen 0.3% month on month in each of the last three months, while a path consistent with 2% year-on-year inflation requires monthly readings of about 0.2% or less — the current run sits persistently above that bar. Second, she singled out services inflation excluding housing as "not moving in the correct direction," a slice she called particularly troubling because it tends to be sticky. Third, producers are increasingly telling the Fed they are running out of room to take cost increases out of margins and are considering passing them on to consumers — "the inflationary impulse we want to avoid."

The policy rate stands at 3.75%–4.00%, after a 25-basis-point hike in September and a hold in October. Reuters reported that financial markets are betting heavily on quarter-point hikes at each of the December 8–9 and January 26–27, 2027 meetings.

The wording hardened notably from the day before: speaking at the Stanford Institute for Economic Policy Research on November 12, Daly had said she leaned toward further hikes but that there was no need to rush. Within a day she moved from "we can wait" to "in all likelihood we need to raise." She also offered a new signal on the consumer: spending remains surprisingly resilient, and the next one to three months — above all the holiday season — are the key window to watch. "We're just starting to hear that the consumer may be running out of gas," she said, "and we're hearing that now in other states, not just Nevada."

Supply-Chain & Market Read-Through: A higher rate path first reprices funding costs: with long-dated Treasury yields holding above 5%, the cost of financing data-center construction and chip-backed loans for hyperscalers and Neoclouds stays elevated, directly raising the hurdle for AI infrastructure capital spending. Second, producers' growing willingness to pass costs through pushes upstream price pressure along the chain into enterprise hardware and services, squeezing data-center operators' procurement pace and margins from both sides. Third, if early signs of consumer fatigue are confirmed over the holiday season, the hit would land on both end demand and the path of services disinflation, making the Fed's trade-off between containing inflation and avoiding a slowdown harder. Daly herself committed to neither a December hike nor a size; the decision remains data-dependent and subject to a collective committee vote.

Next Catalysts & Watchpoints:

• The December 8–9 FOMC meeting, with the decision due December 9 at 14:00 ET / 19:00 UTC; officials enter the pre-meeting blackout period from November 28.
• October PCE on November 25 (08:30 ET / 13:30 UTC) and November CPI on December 10 (08:30 ET / 13:30 UTC), which will test whether core inflation posts a fourth straight 0.3% monthly rise.
• Holiday-season retail sales data, which will test Daly's observation on whether consumers are running out of gas.

Sources:

• Reuters: Fed likely to need to raise rates amid worsening inflation — Daly (Published: 2026-11-13 13:42 ET / 18:42 UTC)
• CoinGabbar: Daly signals December rate move (Published: 2026-11-14 03:30 ET / 08:30 UTC)

Information only, not investment advice.