Federal Reserve Bank of Cleveland President Beth Hammack said on Thursday that U.S. inflation is likely to ease gradually, with her forecast pointing to a year-end rate near 3% and only modest progress toward the central bank’s 2% target by 2025.
Speaking to Fox Business, Hammack noted that while inflation has shown signs of cooling, the pace of decline remains insufficient to meet the Fed’s objective in the near term. She projected that inflation could reach the "mid-twos at best" by next year, underscoring the challenges ahead in sustaining downward momentum.
The Fed’s primary inflation gauge rose 3.7% year-over-year in July, a figure that remains well above the central bank’s 2% target. Hammack’s remarks suggest that the Fed may need to maintain or even raise interest rates further to curb persistent price pressures. She reiterated her stance that a rate hike remains a viable tool to address elevated inflation, despite recent signs of stabilization.
The comments come as the Fed continues to balance its dual mandate of price stability and maximum employment, with policymakers closely monitoring incoming data to determine the appropriate policy stance. Hammack’s forecast aligns with broader expectations that inflation will decline gradually, though the path remains uncertain amid shifting economic conditions.
