Fed’s Beth Hammack Reiterates Call For Rate Hikes Over Inflation Concerns
Highlights
- Beth Hammack said they need to act right now on raising rates.
- The Fed president noted that the current monetary policy isn't restrictive.
- She also asserted that the labor market is stable.
Cleveland Fed President Beth Hammack has again called for Fed rate hikes to address rising inflation amid the uncertainty around the U.S.-Iran war. This comes amid the recent release of the CPI and PPI inflation data, which show that inflation continues to run well above the 2% target.
Beth Hammack Calls For Fed Rate Hikes Again
Speaking at a Dayton event, Hammack said they need to act now by raising interest rates to fight rising inflation and bring it back to their 2% target. She warned that the longer inflation continues to trend well above their target, the harder it will be to bring it down.
Further making a case for Fed rate hikes, she noted that the current monetary policy isn’t restrictive, as businesses are excited to take out loans because they see the opportunity for growth. However, Hammack warned that too much growth opportunity could also put additional pressure on price increases.
The Cleveland Fed president also asserted that the labor market is stable, which gives them room to raise interest rates. It is worth noting that Hammack was one of the dissenters at the July FOMC meeting, as she voted in favor of a hike instead of holding rates steady.
Her call for immediate Fed rate hikes comes amid the release of the CPI and PPI inflation data. As CoinGape reported, the July CPI inflation data came in at 3.4%, below expectations. PPI fell to 4.7%, below expectations of 4.9%.
Barkin Sees Reason To Hold/Hike Interest Rates
In his speech at a Greenville event, Richmond Fed President Tom Barkin, who is a non-voting FOMC member, made a case for both holding rates steady and increasing rates. On one hand, he noted that there is an argument that most of the inflationary pressure that the economy is facing is from shocks that should pass.
“The tariff rates should settle. The Middle East conflict should get resolved. The data center boom should ease at some point. AI-enabled productivity could help lower costs and prices,” he said.
On the other hand, Barkin cited the counterargument in support of Fed rate hikes that elevated inflation is more embedded. Under such a scenario, he noted that supply chain challenges could persist and that AI could be inflationary as the investment wave becomes an excuse for rising prices.
Despite calls for a hike, prediction market data shows a 73% chance that the Fed is likely to hold rates steady again at the September FOMC. However, crypto traders predict a 55% chance that the Fed will hike rates by the end of this year, according to Polymarket data.
Check out the Top Crypto Prediction Market Platforms for more data on the potential Fed rate decision
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