Cleveland Fed's Hammack Says More Rate Hikes Needed to Return Inflation to 2%
Summary
- Beth Hammack, president of the Cleveland Fed, said further rate increases are needed to bring inflation back to the Fed's 2% target.
- Hammack said the current level of monetary policy tightening is not restrictive enough despite the recent rise in bond yields, and that she prefers several smaller rate increases.
- Hammack said persistently high inflation could become embedded in inflation expectations among consumers and businesses, making it harder for the Fed to restore price stability.
Forecast Trend Report by Period
Beth Hammack, president of the Federal Reserve Bank of Cleveland, said further interest-rate increases are needed to bring inflation back to the Federal Reserve's 2% target.
Walter Bloomberg reported on October 12 that Hammack told Barron's the current level of monetary-policy tightening is still not restrictive enough, even after the recent rise in bond yields.
"The economy needs additional tightening," Hammack said. She added that she prefers a series of smaller rate increases rather than a single large move.
She did not specify when the next rate increase might come, leaving the possibility open.
Hammack also warned that if high inflation persists for an extended period, it could become embedded in inflation expectations among consumers and businesses. That, she added, could make it harder for the Fed to restore price stability.
JH Kim
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