Cleveland Federal Reserve President Beth Hammack has renewed her call for higher interest rates, warning the central bank remains too far from its inflation target.
Speaking at the Fed’s annual symposium in Jackson Hole, Wyoming, Hammack pointed to data showing inflation running at around 3% on an annualised basis as cause for concern.
Despite recent monthly figures showing a slower pace of price increases, Hammack argued that the Federal Reserve must tighten monetary policy without further delay.
“I don’t want to prejudge anything. But I believe now is the time to act,” she told CNBC in a live interview from the Wyoming gathering.
“I believe that we’ve been in an inflationary situation for more than five years. It’s been running well above our target. I don’t see any restriction in policy when I look at financial conditions and when I talk to market participants,” she added.
Hammack was one of three dissenters at the July Federal Open Market Committee meeting, where the majority voted to hold the policy rate in a range of 3.5% to 3.75%.
She and two fellow dissenters had favoured a quarter percentage point hike at that meeting, a position Hammack continues to defend publicly.
Hammack warned that prolonged inflation above the Fed’s objective risks embedding an inflationary mindset among the wider public and businesses alike.
“The longer inflation stays above our objective, the harder it will be for us to bring it back down, and the more pain that individuals and businesses are going to be experiencing,” she said.
Much of this year’s inflation has been linked to the impact of the Iran war, tariffs, and surging demand connected to artificial intelligence development.
Hammack illustrated the human cost of persistent inflation by recounting a recent visit with workers in Erie, Pennsylvania, who she said expressed a deep sense of financial anxiety.
Those workers, she said, “were all saying that they’re feeling a sense of despair. They’re working every day, coming in, they’ve got good jobs, and yet they still feel like they can’t make ends meet. They can’t go and afford an ice cream cone on the weekend with their kids.”
Despite Hammack’s hawkish stance, market pricing currently suggests the Fed will hold rates steady at both its September and October meetings, with a potential hike not expected until December.