Beth Hammack, the president and chief executive of the Federal Reserve Bank of Cleveland, thinks the Fed needs to maintain its focus on fighting inflation.
In a new interview with Yahoo Finance, Hammack notes that both sides of the Fed’s dual mandate, stable prices and maximum employment, are under pressure, but she says that inflation is the more serious problem right now.
-->“We have inflation that’s too high and has been trending upwards over the past year. We got one report on the labor market, which is showing some signs of slowing, which is something we need to be attentive to, but the unemployment rate came in at 4.2, which is right around that maximum employment number and has been stable around that level between 4 and 4.3 for the past year.
So when I look at the balance there, to me it’s important that we maintain a modestly restrictive stance of policy to continue bringing inflation back to target.”
Hammack says she doesn’t see the case for reducing interest rates with the data that’s available now, though she acknowledges there’s a lot more data that will become available between now and the Federal Open Market Committee (FOMC) meeting in September.
“I would only want to move into an accommodative stance of policy if I thought that the economy was materially weakening, which I’m not seeing evidence of right now. I’m not seeing any signs of potential significant downturns, and to me, that’s what would require us to move into an easing stance of policy, rather than our currently modestly restrictive stance.”
The CME FedWatch Tool, which generates probabilities using the 30-day Fed Funds futures prices, estimates there is a 75.5 chance the Fed will cut the federal target rate by 25 basis points at the FOMC meeting in September.
