Fed's Hammack says 'now is the time to act' on raising interest rates

Cleveland Fed President Beth Hammack said the Fed needs to “act now” to bring inflation down, even though some recent data point to a slower pace of price increases. Speaking to CNBC from Jackson Hole, she said she does not want to prejudge decisions, but believes the Fed is still too far from its goal. Her emphasis was not just on inflation prints, but on the strain inflation continues to place on household budgets.

Hammack argued the inflation situation has persisted for more than five years and has been running well above target. She also said she sees no restriction on policy in light of financial conditions and feedback from market participants. In her framing, delays increase the challenge of returning inflation to target and raise the risk that an inflationary mindset becomes embedded in the public.

The article notes Hammack was one of three dissenters at the July Fed meeting that decided to hold the policy rate range at 3.5%–3.75%, with the dissenters preferring a quarter-point hike. She linked today’s inflation pressure to factors including the Iran war, tariffs and demand related to artificial intelligence, while suggesting there is concern some of these effects could become embedded rather than temporary.

She also described meeting workers in Erie, Pennsylvania, who said they struggle to make ends meet even with good jobs.

For FX traders, the key watchpoint is whether additional inflation information supports this “tighten sooner” perspective from a voting member, as such communication can influence how markets price the timing and necessity of future rate moves.