The Cleveland Fed President pointed out that geopolitical events and housing prices still pose an upside risk to inflation.
Cleveland Fed President Beth Hammack stated that although progress in reducing inflation has resumed in recent months, officials are not yet ready to declare their mission accomplished. This echoes recent comments by Federal Reserve Chairman Powell.
Hammack said on Thursday, "We have made good progress, but the inflation rate is still higher than the 2% target set by the Federal Open Market Committee (FOMC). The COVID-19 pandemic and its aftermath remind us that different movements in various components of inflation can have a significant impact on the overall inflation path."
At a meeting hosted by the Cleveland Fed's Inflation Research Center, Hammack delivered her first public speech since becoming a Federal Reserve policymaker in August.
She pointed out several factors that may continue to put upward pressure on prices. She said that geopolitical events could lead to a "rapid reversal" of the recent decline in energy prices.
Hammack also said that although inflation in housing services has declined, research by the Cleveland Fed indicates that inflation may remain high due to existing tenants facing gradual rent increases.
Advertisement
The Cleveland Fed President stated that despite the progress in fighting inflation not being "straightforward," officials have been able to maintain a significant strength in the labor market and the overall economy while cooling price growth.
Hammack did not comment on the speed and magnitude of the Federal Reserve's rate cuts. She has voting rights on this year's FOMC interest rate decisions.
Policymakers lowered interest rates by 50 basis points at last month's meeting, marking their first rate cut since the outbreak of the COVID-19 pandemic, as the labor market showed signs of weakness and the inflation rate approached the Federal Reserve's 2% target.
Several policymakers have recently indicated that they favor slowing the pace of rate cuts in the coming months.