In panel remarks at the SNB and Its Watchers Conference in Zurich, Federal Reserve Bank of Cleveland President and CEO Beth Hammack said she expects monetary policy to move to a restrictive stance to return inflation to 2%. She favors more frequent, smaller adjustments where possible. Her remarks also linked the dollar’s international status to central bank independence and access to deep, liquid markets. Inflation has remained above target for nearly six years, with Hammack seeing broad pressures reflecting both supply and demand. Smaller, more frequent policy adjustments would limit disruption to households, businesses and financial markets while reducing the risk of policy falling behind and an inflationary mindset taking hold. The dollar’s reserve currency role requires both trust and markets that allow investors to move freely into and out of the currency. Federal Reserve independence, alongside accountability to Congress, underpins confidence in its commitment to 2% inflation. Delivering on that commitment helps preserve the dollar as a reliable store of value. By contrast, cryptocurrency price volatility makes cryptocurrencies a less certain store of value than the dollar.
Federal Reserve Bank of Cleveland President Hammack expects restrictive monetary policy will be needed to return inflation to 2%
Federal Reserve Bank of Cleveland President and CEO Beth Hammack told the SNB and Its Watchers Conference that she expects restrictive monetary policy will be needed to bring inflation back to 2%, preferably through more frequent, smaller adjustments. With inflation above target for nearly six years, she sees pressures from both supply and demand. She also emphasized central bank independence and deep, liquid markets as foundations of the dollar’s international status.