Cleveland Fed's Hammack flags 'broad-based' inflation, backs rate hikes
A voting member of the Federal Reserve's rate-setting committee has signalled a readiness to raise interest rates, warning that persistent, broad-based inflation poses a greater threat to the US economy than employment.
Cleveland Fed President Beth Hammack, a voting member of the Federal Open Market Committee this year, signalled she could support raising interest rates at upcoming policy meetings to combat persistent price pressures. "Inflation is too high," Hammack wrote in a social media post. Her public intervention followed similar remarks a day earlier by Dallas Fed President Lorie Logan, who also indicated support for tighter monetary policy to curb inflation.
Hammack noted that her recent discussions with business and community leaders revealed inflation is originating from multiple sectors of the economy rather than a single bottleneck. She described the price increases as "broad-based," highlighting a notable shift in corporate sentiment regarding monetary policy. "For the first time in my tenure, I'm hearing from businesses who say they think we need to take action to curb inflation, and from consumers who can't make ends meet about a growing sense of despair," Hammack said.
The hawkish warnings from two regional bank presidents arrive despite a recent moderation in headline figures, with consumer inflation cooling to 3.5 percent in June. However, that reading remains significantly elevated above the central bank's 2 percent target, a gap that has now persisted for roughly five years. For market participants, these comments serve as a stark reminder that the narrative of imminent rate cuts may be disconnected from the realities faced by businesses on the ground.
The Federal Reserve traditionally manipulates borrowing costs to manage its dual mandate of stable prices and maximum employment. Hammack explicitly dismissed the idea of a trade-off between these two goals in the current macroeconomic environment. "There is no conflict between the bank's economic goals right now," she said, making clear that "persistently high inflation is the bigger concern." This framing indicates the central bank remains squarely focused on price stability, keeping the door firmly open for further rate hikes rather than reductions.
