Federal Reserve Bank of Cleveland president Beth Hammack has warned that the US central bank needs to act to bring inflation under control, arguing that current monetary policy is not putting enough pressure on the economy.
In a LinkedIn post on Friday, Hammack said data and reports from businesses across the Cleveland Fed’s district suggested inflationary pressures remained widespread. She referred to a manufacturer in north-east Ohio who urged the Fed to raise interest rates after seeing double-digit increases in several input costs.
Hammack was among the policymakers who voted against the Federal Open Market Committee’s decision in July to leave borrowing costs unchanged. She supported an increase, saying inflation had been above the Fed’s 2 per cent target for too long.
“Now is the time for the FOMC to act to speed the return of PCE inflation to our 2 percent objective,” Hammack said in a statement published by the Cleveland Fed after the July meeting.
She has repeatedly argued that persistent price rises pose a greater threat than the risk of weakening employment. In a speech in June, Hammack said that waiting for conclusive evidence that inflation had become entrenched could force the central bank to make larger and more costly adjustments later.
The Federal Reserve is due to meet on September 15 and 16 to decide whether to change interest rates. The meeting will follow a stronger-than-expected US jobs report, which showed employers added 162,000 jobs in August and gave policymakers greater scope to consider further tightening.
Hammack’s latest intervention adds to pressure within the Federal Reserve for a tougher response to inflation, even as officials continue to weigh the impact that higher rates could have on economic activity and employment.
