Federal Reserve officials reiterated calls for higher interest rates on Thursday, with Cleveland Fed President Beth Hammack and Kansas City Fed President Jeffrey Schmid both signaling support for additional tightening to address stubborn inflation.
Hammack, speaking at a regional bank event, stated that concerns over persistent high inflation justify a rate increase. She dissented in favor of a hike at the Fed's late July policy meeting and noted that recent inflation data aligned with expectations. Hammack emphasized that current policy does not appear restrictive enough to curb price pressures, adding that the neutral interest rate is likely higher than many colleagues estimate. "The main worry is that the public will lose confidence inflation will return to 2%," she said.
Schmid, addressing CNBC from the Kansas City Fed's annual research conference in Jackson Hole, Wyoming, echoed Hammack's stance. He argued that current interest rates are not restraining economic activity sufficiently and stressed the need to sustain efforts to bring inflation back to the Fed's 2% target. "Inflation remains still stubborn and it's still sticky and we've got to continue to find ways to break through," Schmid stated.
Hammack and Schmid's remarks mark the second instance in a single day of Fed officials publicly advocating for higher rates. Hammack declined to speculate on the timing of future policy moves, stating, "We've got a lot of time before our next meeting, so I don't want to prejudge anything." Both officials underscored the urgency of addressing inflation amid concerns over its persistence and the potential erosion of public confidence in the Fed's ability to achieve its target.
