Federal Reserve Bank of San Francisco President Mary Daly indicated on August 20, 2026, that the US Treasury market is signaling the current monetary policy is well-calibrated. Speaking on Bloomberg Television, Daly addressed concerns about the Fed's credibility, stating, "I don’t see our credibility at risk." She also dismissed the notion of an urgent need for preemptive interest rate hikes, noting, "I don’t see a lot of evidence that that’s an urgent problem to solve."
This perspective comes amidst differing views within the Federal Reserve. While Daly sees no immediate need for tightening, Federal Reserve Chairman Kevin Warsh has signaled a potentially hawkish stance on inflation, suggesting a rate hike might be necessary if inflation remains above the central bank's 2% target. Warsh's remarks at the Jackson Hole conference led traders to increase the implied probability of a September rate hike to over 50% from roughly 35% previously.
However, not all analysts agree on the certainty of a September hike. Goldman Sachs, for instance, stated on August 17, 2026, that a September Fed rate hike is "very unlikely." This divergence highlights the ongoing debate within financial circles regarding the Fed's next moves, with some officials indicating a willingness to wait for more data, such as the August consumer price index report due September 11, before making any decisions.
