By Michael S. Derby
NEW YORK, July 31 (Reuters) – Federal Reserve Bank of Cleveland President Beth Hammack said Friday that she voted for a rate hike and against the central bank consensus this week because inflation is too high and is unlikely to ease back to acceptable levels absent central bank action.
“Inflation has remained stubbornly above 2 percent for more than five years, and I am not confident it will return to our objective on its own,” Hammack said in a statement released by her bank.
“A higher federal funds rate would help restrain economic activity and reduce inflationary pressures,” Hammack said, adding, “I preferred to move at our recent meeting because I did not see the current policy stance as appropriately restrictive.”
Hammack was one of three officials who on Wednesday voted in favor of raising what is currently a 3.5% to 3.75% federal funds target rate range. The remainder of central bank officials voted to keep the target rate steady.
Maintaining the Fed’s current monetary policy stance came as inflation remains well above the central bank’s 2% target and is under pressure from energy prices tied to the Middle East war, tariffs and from strong investment related to the build out of artificial intelligence infrastructure.
In her time at the Fed, Hammack has been consistently concerned about inflation in her public comments and in eight votes on the Federal Open Market Committee, she dissented three times in a hawkish direction, according to data from Wrightson ICAP.
Financial markets broadly expect the Fed to lift rates at its next policy meeting set for September.
(Reporting by Michael S. Derby; Editing by Chizu Nomiyama )
