Fed's Hammack worried inflation expectations could deteriorate
CLEVELAND: Federal Reserve Bank of Cleveland President Beth Hammack said on Friday she is concerned that persistently high inflation risks conditioning the American public to accept elevated prices as the norm, adding the central bank cannot let that happen.
Federal Reserve Bank of Cleveland President Beth Hammack expressed concern on Friday about persistently high inflation potentially leading to an inflationary mindset among the American public. She noted that inflation has been above target for over five years and emphasized the need for the Federal Reserve to maintain a restrictive policy stance to bring inflation back to target.
While the July personal consumption expenditures price index increased by 3.7% year-over-year, even underlying inflation remains above the Fed's 2.0% target. Hammack, a member of the Federal Open Market Committee, highlighted that high inflation stems from robust demand due to a strong economy and stable job market, not only from trade tariffs and the Iran war's impact on energy.
She stressed that monetary policy isn't restrictive enough yet and expressed worries about how inflation sentiment, formed by a generation raised without experiencing inflation at target, could impact businesses, households, and policy decisions.
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