Federal Reserve Bank of Cleveland President Beth Hammack said in a LinkedIn post Friday that the US central bank must take steps to lower inflation, arguing that current policy is not exerting enough downward pressure on the economy.
Hammack said that the most recent data and reports she has received from her district point to a need for firmer monetary policy. She noted conversations with regional businesses, including a discussion with a manufacturer in Northeast Ohio who asked the Fed to raise interest rates. That manufacturer told her it faced double-digit inflation across many input prices, she said.
Hammack was among three policymakers who voted against the Federal Reserve's July decision to keep interest rates unchanged. Her LinkedIn post reiterated her view that the level of policy restraint at present is insufficient to bring inflation back toward the Fed's objective.
The Federal Open Market Committee is scheduled to meet on Sept. 15-16 to make a decision on interest rates. Ahead of that meeting, Fed officials will enter a communications blackout period at midnight, limiting public commentary from policy participants.
Market expectations shifted after a strong jobs report released Friday. Investors now assign a probability of slightly above 60% to a rate increase at the September meeting, a level that reflects rising odds of a policy move among market participants.
Hammack's public comments underscore an internal debate among policymakers about the appropriate pace and extent of monetary tightening. Her reference to double-digit input price inflation from a manufacturer highlights the pressure experienced in at least some parts of the manufacturing supply chain within her district.
The coming weeks include two clear markers: the Fed's communications blackout period, which will limit official commentary, and the Sept. 15-16 FOMC meeting when officials will formally set the policy stance. Investors' elevated probability of a September rate increase reflects updated market pricing following the recent labor-market data.