Fed's Hammack: '2% Inflation Is Not In Sight'

Federal Reserve Bank of Cleveland President Beth Hammack has expressed her concerns about the current state of inflation, stating that 2% inflation is "not in sight just yet." In a speech at the University of Kentucky in Lexington, Ky., Hammack emphasized that the pace of price increases is still not all the way back to where the Fed wants it to be, with the Fed's preferred inflation metric stubbornly increasing to 2.6% over the 12 months through December.



Hammack's comments come as the Fed has been grappling with persistent inflation, which has led to a series of rate cuts and a pause in interest rate hikes. The Fed's preferred inflation metric has been above the 2% target for an extended period, and Hammack believes that the Fed's stance is "only modestly restrictive," suggesting that the current interest rate target may be close to a neutral setting that neither boosts nor restrains the economy.

Hammack is not alone in her concerns about inflation. Other Fed officials, such as St. Louis Fed President James Bullard, have also expressed their worries about the persistent inflation and the need for further rate cuts to support the economy. However, Hammack's cautious stance on inflation and interest rates suggests that she is more likely to advocate for a patient approach to monetary policy, waiting for more evidence that inflation is easing back to the 2% target before considering rate cuts.



In her speech, Hammack emphasized the importance of monitoring the trajectories for the labor market and inflation, as well as the overall economic performance in the current rate environment. She believes that a patient approach to monetary policy will allow the Fed to assess the path forward and make informed decisions about future rate adjustments.

In conclusion, Beth Hammack's perspective on inflation and interest rates highlights the ongoing challenges the Fed faces in bringing inflation back to its target of 2%. Her cautious stance on monetary policy suggests that she is more likely to advocate for a patient approach, waiting for more evidence that inflation is easing back to the target before considering rate cuts. As the Fed continues to monitor the trajectory of inflation and the labor market, investors should pay close attention to the evolving views of Fed officials, as they may have significant implications for the future of monetary policy and the broader economy.