Investing.com – The US is still dealing with an “inflation problem”, Cleveland Federal Reserve Bank President Beth Hammack told the Wall Street Journal in an interview published on Friday.
Hammack, who was selected to lead the Cleveland Fed last year and opposed the Fed’s decision to slash interest rates by a quarter of a percentage point at the central bank’s December meeting, told the paper that while there has been “amazing progress” on cooling price growth “we need to continue to finish the job.”
She said that, in her view, the Fed’s conversation around the rate cut revolved around whether it was a necessity at the moment or if policymakers could afford to “be more patient and wait and see”, the Journal said.
A former Goldman Sachs treasurer who worked for three decades at the investment banking giant, Hammack also argued that backing the cut because it was widely priced in by financial markets was “an insufficient reason to do it”, according to the report.
The comments come as investors are attempting to assess the trajectory of inflation — and, by extension, the Fed’s monetary policy path.
Data earlier this week showed that while headline consumer prices in the US rose as expected in December, the underlying measure stripping out volatile items like food and fuel had increased at a slower than anticipated rate.
Bets that the Fed would opt to roll out a couple of further rate cuts by the end of the year were bolstered after the publication of the figures on Wednesday, although the wagers were tempered somewhat by solid economic indicators later in the week.
Minutes from the Fed’s December gathering showed that most members backed taking a careful approach to more rate reductions this year, due partly to uncertainty surrounding the potential impact on inflation of President-elect Donald Trump’s plans for sweeping new import tariffs.
Hammack told the WSJ that the Fed “can be very patient” regarding any future cuts. The Fed is now tipped to leave its short-term benchmark rate unchanged later this month.
