The strong gain in the U.S. consumer price index in June is just part of a temporary “pop” in inflation that won’t last, and the central bank should remain “steady in the boat” with its easy policy stance, San Francisco Fed President Mary Daly said Tuesday.

The gain in the June CPI “really had been expected” and will last for the next couple of months, Daly said, in an interview on CNBC.

Higher prices are caused by a variety of reasons that are well known by now, Daly said. These include temporary bottlenecks and a recovery of low prices from the lows of the pandemic last year.

“Right now, it’s really ‘remain steady in the boat’, and don’t read too much signal out of any month of data. Let’s get through this volatile period so we can see where the economy is,” Daly said.

Just because there have been higher inflation readings since April doesn’t mean that they are here to stay, Daly said.

The key is whether prices are going to continue to rise going forward, she said.

“And I just don’t see that happening in the used-car market, or the airline prices or tourism more generally. All of which are really driving up the inflation numbers,” she added.

“Several months of this doesn’t mean that it’s not transitory,” Daly said.

Used-car prices are a great example of the transitory nature of prices, the San Francisco Fed president said. The price gains are caused by a combination of lack of new cars from the semiconductor shortage and a high demand from workers returning to their jobs. This won’t last and will “work itself out,” she predicted.

See: Why used-car prices are driving U.S. inflation higher – and why it won’t last

Daly is one of the most dovish Fed regional bank presidents. She is a voting member of the central bank’s interest-rate committee this year.

The Fed is buying $120 billion per month of Treasurys and mortgage-related bonds, as well as keeping its benchmark interest rate close to zero, to support financial markets and foster demand in the economy.

The Fed has started a conversation about how and when to slow down the asset purchases.

Asked for her “timeline” of when the Fed might begin to buy fewer bonds, Daly replied: “My own view is we’ll probably be in a good position to taper at the end of the year or early next.”

Daly said it was “premature” to talk about any increase in the Fed’s policy interest rate. She said the spread of the delta variant of the coronavirus was “a risk” to the outlook.

The 10-year Treasury note
TMUBMUSD10Y,
1.380%

yield was up slightly Tuesday after the inflation data was published. The S&P 500
SPX,
+0.02%

edged up 0.11% to 4,389.43, and was hovering near a record, as market took the data in stride.

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