Fed's Hammack Advocates for Higher Rates Ahead of Blackout Period

In her final public remarks before the Fed's blackout period, Cleveland Fed President Beth Hammack expressed significant concerns about persistent inflation, suggesting that interest rates may need to rise. This statement adds to a growing hawkish sentiment among Fed officials ahead of the upcoming FOMC meeting.

Hammack noted that businesses and consumers are increasingly worried about inflation, stating, "For the first time in my tenure, I'm hearing from businesses who say they think we need to take action to curb inflation, and from consumers who can't make ends meet about a growing sense of despair." She estimated that core PCE inflation likely rose by 3.3% in June, highlighting the inflationary pressures still affecting the economy.

As a voting member of the FOMC, Hammack's previous dissent in April against what she perceived as overly accommodative policy underscores her hawkish stance. Her remarks come amid rising concerns from other policymakers about escalating fuel prices linked to geopolitical tensions and inflationary pressures from the rapid expansion of AI-related infrastructure.

The upcoming FOMC meeting, scheduled for July 28-29, will be closely watched as markets anticipate how Chairman Kevin Warsh will navigate a committee that appears increasingly divided. The Fed's blackout period, which restricts public commentary on monetary policy, is now in effect until the meeting concludes. The decision on interest rates will be announced on July 29 at 2:00 PM ET, followed by a press conference with Chairman Warsh.