Cleveland Fed Chair Hammack said policy must move to restrictive levels to drive
disinflation back to the 2% target, warning the current stance risks a
longer-than-acceptable path and therefore requires more tightening. She left
open the possibility of further rate hikes but gave no timing, and said she
favors small, more frequent adjustments to help firms and households plan.
Hammack flagged rising input costs and increasing pass-through to consumers; if
prices are no longer constrained by demand, inf could rise or remain elevated.
The biggest risk is firms and households forming higher inf expectations, and
she said there are early signs of that. On US yields, she cited stronger growth
expectations, market repricing of Fed policy, fiscal pressures and heavy
issuance; data-center investment is boosting growth but financial conditions
still need further tightening. She reiterated that Fed independence remains
crucial.
