Cleveland Fed President Beth Hammack on Friday added her voice to a small but growing chorus of policymakers arguing the Fed may need to raise short-term borrowing costs to deal with persistently high inflation, setting up a charged debate at the central bank's July 28-29 meeting.
"For the first time in my tenure, I’m hearing from businesses who say they think we need to take action to curb inflation, and from consumers who can’t make ends meet about a growing sense of despair," said Hammack, who joined the Fed in 2024 after it ended a run of sharp rate hikes to fight the surge in inflation after the pandemic.
"Inflation is too high. The labor market is right around my level of maximum employment," Hammack said in a LinkedIn post on the last day that Fed policymakers are permitted to speak publicly ahead of their upcoming meeting.
Hammack said underlying inflation, as measured by the core personal consumption expenditures price index, probably rose 3.3% in June.
"Persistently high inflation is the bigger concern," added Hammack, a voter this year on Fed policy who in April cast a dissent protesting what she and two colleagues felt was overly accommodative policy.
The hawkish comments capped a week of talk from Fed policymakers who all expressed concern about higher fuel prices due to the Middle East conflict and rising price pressures from the fast-paced buildout of AI-related data centers.
On Thursday, Dallas Fed President Lorie Logan, who joined Hammack in dissenting at April's meeting, told a group in Houston that the situation requires "modestly higher interest rates." Fed Vice Chair Philip Jefferson, who is typically cautious about expressing policy views, told a Stanford University audience that if inflation "does not start to cool down soon, I believe that it could be appropriate to reconsider our current policy stance."
New York Fed President John Williams, by contrast, said he believes that "unquestionably high" inflation will soon ease, citing half a dozen reasons including the lack of wage-growth pressure from the labor market and his view that shelter inflation will continue to ease.
Fed Chair Kevin Warsh stayed determinedly mum, telling lawmakers this week he feels it would be unwarranted and could even be harmful to hint at how the data is likely to influence his stance on policy.
"My colleagues know I'm not big for forward guidance," he said.
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