Beth Hammack, President of the Federal Reserve Bank of Cleveland, said the US central bank should maintain a tighter monetary policy because inflation remains above comfortable levels. She made the remarks while speaking at a public event, stressing that price pressures have not eased enough.
Hammack said current interest rates are now close to a “neutral” level following the Federal Reserve’s recent quarter-point rate cut. However, she added that she would prefer policy to be slightly more restrictive to ensure inflation continues to move down.
The Federal Reserve recently lowered its benchmark interest rate to support economic growth and employment. Hammack suggested that had she been a voting member at the policy meeting, she might not have supported the rate cut.
She noted that the central bank must carefully balance its fight against inflation with the need to sustain a strong labour market. If inflation remains elevated while economic conditions stay firm, she said policymakers may need to rethink the level of restriction.
Hammack is not a voting member of the Federal Open Market Committee this year but is expected to vote in a future cycle. She also expressed confidence that the Federal Reserve will remain committed to its long-term goal of bringing inflation back to 2 percent.
Also Read: Venezuela oil exports drop after US tanker seizure