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Fed's Daly sees inflation moving back up to 2% target

Greg Robb

Both a tight labor market and concern among businesses about their profit margins should boost inflation as the year unfolds, San Francisco Fed President Mary Daly said on Thursday. In an interview with the Fox Business Network, Daly said she expects inflation to move to the Fed's 2% target, but not above that level. After hovering just below 2% last fall, the Fed's favorite measure of core inflation, the personal consumption expenditure index, fell to a 1.6% annual rate in March. Daly said she expects a tight labor market and steady, if subdued, growth will continue to push up wages, and this will put some upward pressure on prices. At the same time, businesses are "starting to think" about passing along "certain" price increase to customers to protect their profitability, she said.