Cleveland Fed President Mester turns hawkish: Inflation remains too high, labor market near full employment
Cleveland Federal Reserve President Loretta Mester stated: "There is no conflict between our dual mandate. Inflation remains too high, while the labor market is essentially close to what I consider full employment." She also pointed out that, for the first time during her tenure, she has heard companies calling for curbing inflation, and also heard for the first time desperate voices from consumers struggling to make ends meet.
Beth Hammack, President of the Federal Reserve Bank of Cleveland, stated that, with consumer spending remaining robust and unemployment rates staying low, persistently high inflation is currently her greater concern.
Hammack wrote in a post on LinkedIn on Friday:
"Our dual mandate does not conflict. Inflation remains too high, while the labor market is essentially near what I would consider full employment."
Hammack’s comments follow remarks made by Dallas Fed President Lorie Logan on Thursday. Logan called for further rate hikes, saying inflation does not appear to consistently be moving toward the Federal Reserve's 2% target. Both Hammack and Logan hold voting rights on the Federal Open Market Committee (FOMC) for monetary policy this year.
Hammack said that recently she has heard widespread concerns about price pressures from businesses and people in the community, involving areas such as energy costs, supply chain disruptions, rising insurance expenses, and the AI boom.
Nearly two years after taking office as Cleveland Fed President, Hammack said:
"This is the first time during my tenure that I’ve heard businesses say they believe we need to take action to contain inflation; it’s also the first time I’ve heard some consumers who are struggling to make ends meet express increasingly deep despair. I always approach every FOMC meeting with an open mind, with just one goal—to achieve the best result for the American people."
More and more Fed officials have recently warned that if inflation does not continue to move toward the 2% target, the central bank may soon need to raise interest rates again. The latest economic forecasts released by the Fed in June show that half of the 18 policymakers expect at least one more rate hike this year, each by 25 basis points; a few other officials believe there was already reason to hike last month.
Fed officials will hold the next FOMC monetary policy meeting in Washington from July 28 to 29.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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