Hammack says the Federal Reserve needs to tighten policy further to lower inflation

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Fed's Hammack: Further policy tightening is needed to lower inflation

BlockBeats news,October 13, Cleveland Fed President Hammack said that the Federal Reserve needs to bring monetary policy to a restrictive level to push inflation back to 2%target. She said the current policy stance means that the return of inflation may take longer than acceptable, and therefore “more tightening is needed.”

Hammack said further rate hikes may still be needed, but the timing remains uncertain. She favors making “small, more frequent” adjustments to help businesses and households plan ahead. Hammack said input costs for businesses are rising, and more businesses are beginning to pass those costs on to consumers. If prices are no longer constrained by demand, inflation could rise further or remain elevated.

She said the greatest inflation risk is that individuals and businesses develop an “inflation mindset” and gradually accept higher inflation, which would make it more difficult for the Federal Reserve to bring inflation back to target; some signs of this have already emerged. Regarding the rise in U.S. Treasury yields, Hammack said it was driven mainly by economic growth expectations, market repricing of Federal Reserve policy, fiscal pressures, and heavy bond issuance. She said the data center investment boom is driving growth, but financial conditions still need to tighten further to help bring inflation down. Hammack also stressed that Federal Reserve independence is “always critically important.” (Jinshi)

Original link https://m.theblockbeats.info/flash/371448

Key points

Cleveland Fed President Hammack said that the Federal Reserve needs to bring monetary policy to a restrictive level to push inflation back to 2%target.
Hammack said the current policy stance could mean that inflation takes longer than acceptable to fall, and that more tightening is therefore needed.
She said further rate hikes may still be needed, but the timing remains uncertain, and she favors making small, more frequent adjustments.
She said input costs for businesses are rising, and some businesses have begun passing those costs on to consumers.
She said the data center investment boom is driving growth, but financial conditions still need to tighten further.
She stressed that Federal Reserve independence is always critically important.

AI-assisted interpretation

The following is analysis, separate from reported facts. Verify important claims independently.

Hammack believes that the existing policy stance is not strong enough to bring inflation back to 2%, so rates could continue to rise in the future. She is also concerned that businesses raising prices and the public accepting high inflation could make disinflation more difficult.

Why it matters to readers

This suggests that at least one Federal Reserve official supports maintaining tight financial conditions. The market will need to monitor subsequent inflation, employment, and growth data, as well as whether other officials support further tightening.

Rate hikes typically increase borrowing costs and may affect bond, foreign-exchange, and equity valuations; however, this material does not provide data on actual market reactions.

Risks and unknowns

Hammack said rates could rise in the future, but did not specify a date.
The material does not provide an independent source for Hammack's original remarks or any cross-validation.
The material does not state whether other Federal Reserve officials support further policy tightening.
The material does not provide actual changes in U.S. Treasury yields,USD or U.S. equities following the remarks.

Hammack says the Federal Reserve needs to tighten policy further to lower inflation

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