(March 7): Federal Reserve Bank of San Francisco president Mary Daly said rising housing costs have contributed to higher inflation, calling the sector “broken.”

Unaffordable housing, driven in part by a lack of supply, have helped drive up prices beyond the Fed’s 2% target, Daly said Wednesday in prepared remarks for a conference in Portland, Oregon.

“Rising housing costs have been a key driver of these misses, boosting inflation and worsening affordability,” Daly said.

While the Fed’s high interest rates also contribute to making housing less affordable, that policy is temporary, she said. Daly, a voter on interest-rate policy this year, didn’t comment on the outlook for rates.