Fed’s Hammack calls for rate hikes, second Fed official today

Investing.com -- Federal Reserve Bank of Cleveland President Beth Hammack said Thursday that concerns about persistent high inflation support the central bank raising interest rates.

"We've got a lot of time before our next meeting, so I don't want to prejudge anything," Hammack said in a CNBC interview. "But I believe now is the time to act" given inflation's continued trend above the 2% target, she said. Hammack dissented in favor of an interest rate increase at the Fed's late July policy meeting.

Hammack said the most recent inflation number was as expected and noted she does not see Fed policy providing restriction for the economy. She stated it is appropriate for the Fed to act to lower inflation.

"The main worry is that public will lose confidence inflation will return to 2%," Hammack said. She added that contacts are very worried about the state of inflation and cost of living.

Hammack said she is worried an inflationary mindset may be starting to form. She noted that neutral monetary policy is something you know when you see, and believes the neutral rate is on the higher side relative to other Fed officials.

Hammack became the second Fed policymaker Thursday to call for rate hikes. Earlier in the day, Federal Reserve Bank of Kansas City President Jeffrey Schmid said current interest rates are not restraining the economy, indicating he still supports raising rates to bring inflation back to the 2% target.

Speaking on CNBC from his bank's annual research conference in Jackson Hole, Wyoming, Schmid said inflation remains "still stubborn and it's still sticky and we've got to continue to find ways to break through" to reach the 2% target.

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