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Fed's Daly says she expects inflation to reach 2% goal next year

SAN RAMON, Calif. (Reuters) - U.S. inflation, which has fallen short of the Federal Reserve’s 2% goal for years, should reach that benchmark next year, pushed by a tight labor market and rising wages, San Francisco Federal Reserve Bank President Mary Daly said on Wednesday.

The Fed’s three rate cuts last year put the U.S. economy on track to grow this year by 2%, slower than last year but still fast enough to keep unemployment near its current 3.5% level and to push up wages by between 3% and 3.5%, Daly said at the Bishop Ranch Executive Forum in San Ramon. Those forces will push up inflation to 2% and keep it there “sustainably,” Daly said.

Reporting by Ann Saphir; Editing by Chizu Nomiyama