Cleveland Fed's Hammack Blames Demand Pressures for Sticky Inflation

Federal Reserve Bank of Cleveland President Beth Hammack said Thursday that inflation is being propped up by what she called real demand pressures. She argued the Fed has been falling short on its inflation mandate for years. Her remedy is a more restrictive monetary policy, which she said is necessary to bring prices down.

Hammack's stance is no recent conversion. The Cleveland Fed chief has backed rate hikes and remained in favor of one at the Fed's July meeting, even as the central bank weighed its next move.

She isn't alone in pushing for a harder line. Fed Vice Chair for Supervision Michelle Bowman said persistent inflation and a firming labor market mean there is still work to do to reach the central bank's target. Governor Christopher Waller has floated considering a half-point hike, while Dallas Fed President Lorie Logan said the current federal funds rate of 3.75% to 4% was too low and adding to inflationary pressure.

Not everyone is sprinting. Richmond Fed President Tom Barkin said Monday that policymakers should respond cautiously to persistent inflation, calling it the main risk to the Fed's goals of stable prices and maximum employment. Businesses are still passing on rising costs, he said, while warning that artificial intelligence adds another layer of uncertainty.