Federal Reserve Bank of Cleveland President and CEO Beth Hammack told the National Association of Business Economics annual meeting that restrictive monetary policy remains appropriate to return inflation to 2 percent in a timely manner. She assessed inflation pressures as relatively broad based and warned that persistently elevated inflation increases the risk of an inflationary mindset becoming entrenched. Hammack said her policy reaction function draws on economic data, financial conditions, forecasts, risks and direct feedback from people in the economy. While policymakers should rarely give firm predictions for the federal funds rate, she argued that explaining how policy may respond to changing conditions helps households, businesses and markets make informed decisions. When feasible, she favors making smaller adjustments relatively quickly rather than waiting and potentially requiring a larger correction.
Federal Reserve Bank of Cleveland President Hammack supports restrictive monetary policy and smaller prompt adjustments
Federal Reserve Bank of Cleveland President and CEO Beth Hammack said restrictive monetary policy remains appropriate to secure a timely return to 2 percent inflation. She favors smaller, relatively prompt adjustments when feasible and supports explaining policymakers’ reaction functions without predicting a fixed path for the federal funds rate.