Fed’s Hammack says policy restrictiveness still needed
The Cleveland Fed President Beth Hammack crossed the wires once more in Fox Business, stating that the job market is broadly in balance, while adding that “we need restrictiveness in policy.”
Cleveland Fed President Beth Hammack has stated that the job market is currently well-balanced, but the Federal Reserve (Fed) still needs to take a more restrictive approach to policy. Hammack expects inflation to gradually slow down and end the year around 3%, with next year's inflation possibly easing to around 2.5%. The Fed's main objective is to maintain price stability and promote full employment, using interest rates as its primary tool.
When inflation is high or unemployment is too low, the Fed raises interest rates to curb borrowing and strengthen the US Dollar. Conversely, when inflation is below target or unemployment is too high, the Fed lowers interest rates to encourage borrowing and weaken the Dollar. The Fed holds eight policy meetings annually to assess economic conditions and make monetary policy decisions.
In extreme cases, they can resort to Quantitative Easing (QE) to boost credit flow in a struggling financial system. Quantitative tightening (QT) is the opposite process, where the Fed stops buying bonds and reduces the US Dollar's value. Current market trends indicate cautious sentiment ahead of upcoming economic data releases and the Federal Reserve Chair's speech at the Jackson Hole Symposium.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
