Cleveland Fed Pres. Hammack: Inflation is too high and trending higher

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Cleveland Fed President Beth Hammack remains firmly focused on combating inflation rather than cutting interest rates, despite market anticipation of a September rate cut following Fed Chair Powell’s recent remarks.

In an interview with CNBC at Jackson Hole, Hammack stressed that inflation remains too high and has been trending upward, creating hardship for lower-income households.

“For me, what the decision really comes down to is that inflation is too high. It’s been trending higher. It puts a real pinch on lower income households,” she said, marking just over one year in her position as Cleveland Fed President. “We’ve been above our target for four years, and we need to get that under control.”

Despite recent downward revisions in employment data, Hammack maintained that the labor market remains healthy with unemployment at 4.2%, which she described as “historically low.”

She indicated that, while she keeps an “open mind” about upcoming policy decisions, her current priority is addressing inflation rather than unemployment, noting that the latter appears to be “around full employment.”

Hammack revealed she believes current monetary policy is only “very modestly restrictive” and estimates that rates are close to the neutral level.

“So, I think we have a very small distance to go to get to neutral,” she said, adding that her estimation of the neutral rate is “one of the higher ones on the committee.”

When asked about calls for Fed Governor Lisa Cook to resign over allegations, Hammack defended her colleague, stating, “I know Lisa Cook to be an outstanding economist and a person of high integrity.”

She also emphasized the critical importance of Fed’s independence in monetary policy decisions to “ensure great outcomes for the American public.”

Hammack concluded by expressing caution about moving too quickly toward accommodative policy, warning that such a shift could “reinvigorate the inflationary pressure.”

MORE ON THE FEDERAL RESERVE:

* Powell says shifting risks may warrant rate adjustment [https://seekingalpha.com/news/4488346-shifting-risks-may-warrant-rate-adjustment-fed-chair-powell-says-at-jackson-hole#hasComeFromMpArticle=false]
* The Greenback Is Firm Ahead Of Powell's Jackson Hole Speech [https://seekingalpha.com/article/4815946-the-greenback-is-firm-ahead-of-powells-jackson-hole-speech#source=url_first_level%3Anews%7Csection%3Anews_more_on%7Csection_asset%3Aline_1%7Cbutton%3Alink]
* Justice Department urges removal of Fed's Cook during probe [https://seekingalpha.com/news/4487980-justice-department-urges-removal-of-feds-cook-during-probe---report#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews]
* Atlanta Fed's Bostic continues to view one rate cut this year as appropriate [https://seekingalpha.com/news/4487864-atlanta-feds-bostic-continues-to-view-one-rate-cut-this-year-as-appropriate#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews]
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