ICYMI – Fed’s Hammack makes closing case for higher rates before blackout begins
Hammack's remarks, delivered on the final day policymakers could speak before the blackout period, raise the odds of a more contentious tone at the July 28-29 meeting and increase the chance of a repeat dissent similar to her April vote. Markets are likely to price in a slightly higher probability of a hike, or at minimum a more hawkish statement, given how many policymakers voiced similar concerns over the past week. Traders will also watch for any signal on how Chairman Warsh, who has kept his own views close to his chest, intends to manage a Committee that looks increasingly split. A hawkish outcome would likely support the dollar and push short term Treasury yields higher, while a more dovish resolution could see those moves unwind quickly.
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Cleveland Fed President Beth Hammack used her final public remarks before the blackout period to argue inflation remains too high and rates may need to rise, adding to a growing hawkish chorus ahead of Chairman Kevin Warsh's second meeting in charge.
Summary:
- Cleveland Fed President Beth Hammack said businesses and consumers are increasingly voicing concern about persistent inflation
- Hammack estimated core PCE inflation probably rose 3.3% in June
- She said the labor market is around maximum employment while inflation remains too high
- The comments came on the last day Fed policymakers are permitted to speak publicly before the blackout period ahead of the July 28-29 FOMC meeting
- Hammack, a voting member this year, dissented in April in protest of what she and two colleagues saw as overly accommodative policy
- Other policymakers this week flagged concerns about rising fuel prices tied to the Middle East conflict and price pressure from the fast paced build out of AI related data centers
- The Fed's next policy decision is due Wednesday, July 29 at 2:00pm US Eastern time, which is 6:00pm GMT
Cleveland Fed President Beth Hammack added her voice on Friday to a growing chorus of policymakers arguing that interest rates may need to rise to beat back persistent inflation, setting up a charged debate at the Fed's next meeting and raising the possibility of dissents at Chairman Kevin Warsh's second meeting at the helm. The remarks came on the last day Fed officials are permitted to speak publicly before the pre meeting blackout period takes effect ahead of the Federal Open Market Committee's July 28-29 gathering.
"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," Hammack said in a LinkedIn post.
"Inflation is too high. The labor market is right around my level of maximum employment," she said, adding that underlying inflation, as measured by the core personal consumption expenditures price index, probably rose 3.3% in June. Hammack, a voting member of the Committee this year, cast a dissent in April protesting what she and two colleagues viewed as overly accommodative policy, and Friday's comments suggest she remains firmly in the hawkish camp heading into the next meeting. along wioth her Dallas colleague:
Her remarks capped a week in which several Fed policymakers expressed concern about higher fuel prices stemming from the Middle East conflict and rising price pressures linked to the rapid build out of AI related data centers. Chairman Warsh, for his part, has kept his own views largely to himself, leaving markets to guess how he intends to steer a Committee that appears increasingly divided between those pushing for further tightening and those content to hold steady.
The Fed's blackout period, which bars policymakers from public comment on monetary policy, now runs until the conclusion of the July meeting. The Committee's decision is due Wednesday, July 29 at 2:00pm US Eastern time, equivalent to 6:00pm GMT, with a press conference from Chairman Warsh to follow.
This article was written by Eamonn Sheridan at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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