Fed’s Hammack says policy still isn’t restrictive despite high inflation

Cleveland Federal Reserve (Fed) President Beth Hammack said on Friday the two sides of the Fed's dual mandate are not in conflict. She said that “high inflation complicates economic planning,” and that she doesn’t see current policy as restraining the economy.

Hammack added that inflation expectations are “well anchored.”

Key highlights:

There are lots of long-term questions on what AI will mean for inflation

Sides of Fed mandates are generally not in conflict

Persistently high inflation has 'real costs', pressures wages

High inflation complicates economic planning

Fed policy is not restraining activity outside of housing

Don't see current policy as restraining the economy

Rising bond yields driven by a number of factors

Good economic outlook is pressuring up bond yields

Some of what the bond market is doing is in reaction to the Fed and government policy

AI investment demand is competing for investors in the bond market

Inflation expectations are reasonably well anchored

The US is on an unsustainable fiscal path

I am mindful of financial conditions, but the Fed is the decision maker on monetary policy