Fed’s Hammack Says More Work Needed on Inflation Despite Progress

Beth Hammack, president of the Federal Reserve Bank of Cleveland, emphasized that while progress has been made in reducing inflation, it remains above the Fed's 2% target, and officials are not yet ready to declare their job done. Speaking at a conference hosted by the Cleveland Fed’s Center for Inflation Research, Hammack acknowledged that inflation is still a concern and pointed to geopolitical events and rising rents as potential factors that could push prices higher.

“We have made good progress, but inflation is still running above the FOMC’s 2% objective,” she said, referring to the Federal Open Market Committee (FOMC). She also warned that energy prices, which had recently fallen, could quickly rise again due to global tensions, and that housing services inflation may remain elevated as rent increases continue for existing tenants.

Despite these inflationary pressures, Hammack noted that the Fed’s policies have cooled price growth without derailing the economy, highlighting the strength in the labor market. She refrained from giving specific guidance on the pace or extent of future interest rate cuts, following the half percentage point cut by the Fed last month. Many officials are leaning toward more gradual rate reductions in the coming months as inflation approaches the central bank’s 2% goal.