Cleveland Fed President Beth M. Hammack said she expects U.S. monetary policy will need to become restrictive to bring inflation back to 2%, and favors smaller adjustments made more often.
At a conference in Zurich on Thursday, Nov. 5, Hammack described inflation pressures as broad-based, with contributions from both supply and demand. She said prices had remained above the Fed’s 2% goal for nearly six years. Her prepared remarks gave no date or size for a future rate move.
Hammack said she favored “more frequent smaller adjustments when possible.” She argued that a gradual sequence could limit disruption for households, businesses and financial markets, help the Fed avoid falling behind price pressures and keep high inflation from becoming entrenched. She said the speech reflected her own views, not necessarily those of the Federal Reserve System or her colleagues on the Federal Open Market Committee (FOMC).
The remarks followed the FOMC’s Oct. 28 vote to hold the federal funds target range at 3.75%-4.00%. The Fed said the committee voted 10-2, with Hammack and Fed Governor Lisa D. Cook dissenting in favor of a 25-basis-point increase. Their votes reflected their preference at that meeting; Hammack did not announce a new committee decision or a future rate path in her speech.
September data from the Bureau of Economic Analysis (BEA) showed the personal consumption expenditures (PCE) price index rose 3.6% from a year earlier. The index excluding food and energy increased 3.1%. Both readings were above the Fed’s 2% goal.
The BEA’s next Personal Income and Outlays report, covering October, is scheduled for Nov. 25 at 8:30 a.m. ET. The next FOMC meeting is scheduled for Dec. 8-9.
