“For the first time in my tenure, I’m hearing from businesses who say they think we need to take action to curb inflation, and from consumers who can’t make ends meet about a growing sense of despair,” said Hammack, who joined the Fed in 2024 after it ended a run of sharp rate hikes to fight the surge in inflation after the pandemic.
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“Inflation is too high. The labor market is right around my level of maximum employment,” Hammack said in a LinkedIn post on the last day that Fed policymakers are permitted to speak publicly ahead of their upcoming meeting.
Hammack said underlying inflation, as measured by the core personal consumption expenditures price index, probably rose 3.3% in June.
“Persistently high inflation is the bigger concern,” added Hammack, a voter this year on Fed policy who in April cast a dissent protesting what she and two colleagues felt was overly accommodative policy.
The hawkish comments capped a week of talk from Fed policymakers who all expressed concern about higher fuel prices due to the Middle East conflict and rising price pressures from the fast-paced build out of AI-related data centers.
Traders of interest-rate futures now see about a 15% chance of a July rate hike, rising to about 65% by the Fed’s next meeting in September.
“Our interpretation is the hawks are coming out en masse to try to ensure the Fed follows through on Warsh’s tough talk and actually raises rates in September if the next two inflation prints run hot over the summer and/or continued US-Iran conflict pushes oil prices and inflation expectations higher on a sustained basis,” wrote Evercore ISI analyst Krishna Guha.
WARSH REFRAINS FROM JOINING PUBLIC DEBATE
Not all of the Fed officials on the speaking circuit this week were as extensively focused on the upside risks to inflation.
“My colleagues know I’m not big for forward guidance,” he said.
Consumer price inflation slowed more than expected in June, increasing by a still-high 3.5% from a year earlier after surging 4.2% in May, the Labor Department said this week.
Fed Governor Christopher Waller, who argues that telling the public how data impacts Fed policymakers’ decision-making is central to the job, signaled the cooling would give him small comfort. On Monday, he said he would need to see “several months” of cooler readings before feeling inflation was headed back to the Fed’s 2% goal.
Reporting by Ann Saphir; Editing by David Gregorio, Dan Burns and Nick Zieminski
Our Standards: The Thomson Reuters Trust Principles.
Source: Original Article
