Beth Hammack inflation remarks on Thursday called for the Fed to act now, with the Cleveland Fed chief saying delay would bring more pain.
Speaking at a Dayton Area Chamber of Commerce event, Hammack said the central bank should move to push inflation back toward its 2% target. She warned that waiting longer would hurt households and businesses more. Moreover, she said the current backdrop calls for restraint, not patience.
Hammack said she sees no conflict between maximum employment and stable prices. She argued that policy is not restrictive now. In addition, she said businesses still want to borrow and invest, which she views as adding to price pressure.
Beth Hammack Inflation Case Hardens
Hammack said some policy restraint is needed because inflation remains above 3%. She added that recent gains in inflation data over the past two months did not convince her that the deeper trend had changed. Therefore, she questioned whether a three- to four-year return to the 2% goal would be acceptable.
She also pointed to the labor market to support her case. Hammack described conditions as fairly stable, though less dynamic than before. Meanwhile, she said payroll growth averaged about 20,000 jobs a month over the past three to twelve months.
She partly linked that slowdown to recent shifts in immigration policy. Even so, she said the pace still matched what she sees as a breakeven level. She also noted that the unemployment rate stayed between 4.1% and 4.3% over the past year.
July Dissent and Rate View
Hammack was one of three Federal Reserve officials who dissented at last month’s meeting. She preferred a rate increase instead of keeping the federal funds rate at 3.50% to 3.75%. As a result, her latest comments kept a firm hawkish tone.
She said the key issue is not whether inflation returns to target, but how fast that happens. To show the strain she sees, Hammack shared examples from talks with businesses and households. Notably, she cited a Cincinnati retailer that raised prices early, a father skipping his son’s travel football games because of fuel costs, and workers using food banks despite having steady jobs.
Those examples, she said, show why the Fed should move faster rather than accept a long path back to target.
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Source: InvestingLive
