Fed’s Hammack says policy still isn’t restrictive despite high inflation
Cleveland Federal Reserve (Fed) President Beth Hammack said on Friday the two sides of the Fed's dual mandate are not in conflict. She said that “high inflation complicates economic planning,” and that she doesn’t see current policy as restraining the economy.
Federal Reserve (Fed) President Beth Hammack stated on Friday that the Federal Reserve's dual mandate of promoting price stability and full employment is not at odds with each other. She acknowledged that high inflation makes economic planning more challenging and emphasized that inflation expectations are currently well anchored.
Hammack did not perceive the current policy as having a restraining effect on the economy, except for the housing sector. She highlighted that persistently high inflation incurs real costs, affects wage pressures, and complicates economic planning. While rising bond yields are driven by multiple factors, she noted that some market movements are a reaction to both Fed and government policies.
Hammack also pointed out that AI investment demand is competing with investors for opportunities in the bond market. Despite these factors, she expressed confidence in the overall economic outlook, which is pushing up bond yields. She noted that the US fiscal path is unsustainable in the long run, but she remains mindful of financial conditions and understands that the Federal Reserve (Fed) is the decision-maker for monetary policy.
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