Higher rates could be needed to avoid 'inflationary mindset' taking hold, says Fed's Hammack

Cleveland Fed President Beth Hammack, a voting member of the Fed's policy committee, said tighter monetary policy may be needed to bring inflation down, and that the Fed should make smaller adjustments relatively quickly rather than risk a larger correction later. She said sticky inflation challenges consumers, businesses and policymakers, and expects it will take “some time” to return to the 2% goal. The PCE price index rose 3.4% year over year in August, with the core reading at 3%. Hammack warned that persistent high inflation raises the risk of an “inflationary mindset” becoming entrenched, though long-run inflation expectations remain well anchored. Traders priced a more than 78% chance the Fed keeps rates unchanged at its policy meeting later this month and nearly 88% chance of a hike at the final meeting of the year in December, according to CME's FedWatch tool.

Summary written by Upside AI from the original article. Read the source for full details.

Read the original on CNBC ↗

All news →