US Inflation Concerns

Investing.com – The US is still grappling with an “inflation problem,” stated Cleveland Federal Reserve Bank President Beth Hammack in a Wall Street Journal interview published on Friday.

Hammack, who was appointed to lead the Cleveland Fed last year, previously opposed the Fed’s decision to cut interest rates by a quarter percentage point at the December meeting. She noted that while there has been “amazing progress” in cooling price growth, there’s still work to be done: “we need to continue to finish the job.”

In her view, the Fed’s discussions about the rate cut centered on whether it was necessary or if policymakers could afford to “be more patient and wait and see,” as the Journal reported.

A former treasurer at Goldman Sachs with three decades of experience in investment banking, Hammack argued that supporting the rate cut just because it was anticipated by financial markets was “an insufficient reason to do it.”

These comments come as investors aim to gauge inflation’s path and its influence on the Fed’s monetary policy.

Earlier data showed that while headline consumer prices in the US rose as expected in December, the core measure, excluding volatile items like food and fuel, increased at a slower rate than anticipated.

Expectations that the Fed might introduce further rate cuts this year gained momentum after these figures, although were moderated by solid economic reports later in the week.

Minutes from the Fed’s December meeting indicated that most members favored a cautious approach to more rate reductions, partly due to uncertainties surrounding President-elect Donald Trump’s new import tariff plans.

Hammack concluded by stating the Fed “can be very patient” regarding future cuts, with expectations that the short-term benchmark rate will remain unchanged later this month.