Hammack Calls for Prompt, Smaller Fed Steps to Curb Inflation

what happened

Newsmetry API reports that Cleveland Fed President Beth Hammack would favor making modest policy changes soon to restrain inflation instead of waiting and potentially having to alter the course more sharply. In prepared remarks for the National Association of Business Economics' annual meeting, she said inflation pressures are spread relatively broadly across the economy rather than being limited to one area, such as energy.

Hammack said a prolonged period of elevated inflation increases the danger that inflationary thinking will become embedded in the economy. With the labor market stable and other parts of the economy showing strength, she said the time is right for a more restrictive monetary stance. Hammack serves on the Fed committee that sets rates and lifted them last month. CME's FedWatch tool currently puts the chance of another increase at the meeting later this month at just under 22%.

why it matters

Hammack's comments reinforce the case for keeping monetary policy restrictive. Markets will weigh her inflation assessment alongside the current probability of another rate increase.

instruments