Fed's Hammack says inflation mindset could start to set in
Cleveland Fed President Beth Hammack said persistent above-target inflation risks conditioning the public to accept elevated prices. She said policy needs to remain restrictive to help bring inflation back to target.
(Adds more quotes, details) Fed's Hammack says above-target inflation pressures creating risk Hammack wants restrictive monetary policy to bring inflation to target Hammack says inflation expectations are contained so far By Michael S. Derby Sept 25 (Reuters) — 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.
“The biggest risk that I see with inflation right now is that an inflationary mindset could start to set in” given that inflation has been over target for more than five years, the official said at an event at her bank. ” Hammack stopped short of saying what she wants the central bank to do on rates in her appearance, but she was an early and strong supporter of raising its interest rate target to help bring inflation back to target. 7% in July versus a year ago, as even underlying inflation is above the Fed’s goal. 75% and 4%.
Officials penciled in another increase before year end although market participants expect the Fed to hike by more than that. Hammack said that high inflation is not just from shocks like trade tariffs and the energy impacts of the Iran war, but also owes to robust demand tied to the solid performance of the economy and the stability of the job market. Inflation Sentiment The official, who holds a vote on the rate-setting Federal Open Market Committee this year, said monetary policy isn’t where it needs to be yet. “I don't see our policy stance as restraining investment in the economy,” Hammack said.
” But, “if it's creating you know more inflationary pressures, that's something we need to be mindful of” and should be addressed by policy, Hammack said. While Hammack said that inflation expectations appear to be in check, she worries about inflation sentiment. S. who've grown up without really knowing inflation at target for a sustained period,” Hammack said.
“How does that impact businesses, households, their behaviors? How does that shift their thinking? ” “We're reasonably well anchored from an inflation expectations perspective” and rising bond yields reflect a solid economic outlook, competition for investor cash due to strong tech sector investment, as well as investors adjusting prices to deal with the monetary policy outlook, the official said. (Reporting by Michael S.
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