Cleveland Fed President Beth Hammack said tighter policy may still be needed to bring inflation back to 2%, warning that persistent price growth could harden into an inflationary mindset.
01Summary
- 01Beth Hammack said on Monday that smaller, quicker policy moves are preferable to waiting and risking a larger course correction.
- 02She said a restrictive monetary policy stance is appropriate to bring inflation back to the Federal Reserve's 2% target.
- 03The Fed raised interest rates last month for the first time in three years.
- 04Traders see a more than 78% chance that rates will stay unchanged this month and a nearly 88% chance of a hike in December, according to CME's FedWatch tool.
- 05The personal consumption expenditures price index was 3.4% year on year in August, while the core measure was 3%.
02Why it matters
Hammack's comments point to the risk of further rate rises, which would affect borrowing costs for households and businesses. They also show the Fed remains concerned that inflation is proving stubborn and could stay elevated for longer.
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