Fed’s Hammack calls for rate hikes, second Fed official today

Federal Reserve Bank of Cleveland President Beth Hammack called for interest rate hikes on Thursday, citing persistent high inflation as the reason. In a CNBC interview, Hammack stated that concerns about inflation's continued trend above the 2% target support the central bank raising interest rates. She expressed her belief that now is the time to act, despite the fact that she did not vote for an increase at the Fed's late July policy meeting.

Hammack noted that the most recent inflation number was as expected and that she does not see Fed policy providing restraint for the economy. She emphasized that it is appropriate for the Fed to act to lower inflation, as the main worry is that public confidence will wane if inflation does not return to the 2% target. Hammack expressed concern that an inflationary mindset may be starting to form and that the neutral monetary policy is something you know when you see, with the neutral rate being on the higher side relative to other Fed officials.