MNI BRIEF: Fed's Hammack Cites Upside Price Risks For Dissent
MNI (WASHINGTON) - Cleveland Fed President Beth Hammack said Friday she dissented against this week's FOMC rate cut in favor of keeping policy on hold because the risk has risen that inflation pressures will linger for longer.
"The economy’s momentum and recent elevated inflation readings caused me to revise up my inflation forecast for next year. In addition, the balance of risks to the outlook appears to be skewed toward higher inflation outcomes," she said in a statement. "A stall in inflation above 2% for too long would risk de-anchoring inflation expectations, making it harder to return inflation to our objective."
"Based on my estimate that monetary policy is not far from a neutral stance, I prefer to hold policy steady until we see further evidence that inflation is resuming its path to our 2% objective." (See MNI: Fed Inflation Fears Back On Rise, Even Before Tariffs)
The Fed this week cut rates by a quarter point but revised down its view of 2025 cuts to two from four. The Summary of Economic Projections showed Hammack was not alone -- three non-voting members of the FOMC also penciled in no additional reductions for 2024 in their forecast, indicating they preferred not to cut.