Cleveland Fed President Hammack Calls for Restrictive Stance in Inflation Fight

Cleveland Fed President Beth Hammack stated that officials need to act by adopting a restrictive policy stance in order to bring inflation back to the target level.

Inflation Target and Restrictive Policy

Speaking to CNBC in Jackson Hole, Wyoming, Hammack stated that adopting a restrictive stance would be appropriate to bring inflation down to the target level. Hammack emphasized that the longer inflation remains above the target, the harder it will be to bring the level down.

Pointing out that failing to reach the inflation target for a long time poses the risk of an inflationary mindset entrenching among the public, Hammack noted that this situation constitutes a fundamental problem.

Interest Rate Decisions and Recent Inflation Data

Hammack, who was one of three dissenting officials who voted in favor of a quarter-point rate hike at last month's policy meeting, did not concur with the decision to keep the benchmark rate steady for the fifth consecutive time.

According to data released on Wednesday, the personal consumption expenditures price index rose 3.7 percent year-on-year in July. The core indicator, which excludes food and energy prices, recorded an annual increase of 3.3 percent, showing that inflation has been running above the Fed's target for more than five years.