A Fed president warns current rates lack sufficient restraint, urging preemptive action to avoid sharper future tightening.
Cleveland Federal Reserve President Beth Hammack stated that more than one 25 basis point interest rate increase is likely needed to control inflation. She emphasized that current rates between 3.5% and 3.75% are not significantly restraining economic activity, as businesses report no impact on growth investments.
Hammack compared the situation to driving, advocating for gradual rate hikes now to avoid abrupt measures later. Core Personal Consumption Expenditures inflation stood at 3.3% in June, above the Fed’s 2% target. She noted that delaying action risks allowing inflation to drift further from the goal.
The official expressed a preference for being wrong about the need for further tightening but sees no signs of inflation returning to target independently.