Hammack: Fed policy not restrictive enough, backs rate hikes

Cleveland Fed President Beth Hammack has adopted a clearly hawkish stance on monetary policy, arguing that the Fed's current position is insufficiently restrictive while inflation stays elevated.

Hammack says input from local business contacts suggests the time has arrived for the Fed to raise interest rates as a way to help bring inflation back under control.

Her comments lend weight to the prospect that the Fed may have to tighten policy further if price pressures remain high. For traders, that could be a positive for the US dollar and US yields and a negative for stocks. Still, the eventual market response will depend on whether upcoming inflation and employment figures back her assessment.

Key points from Hammack:

• The central bank's policy is not restrictive, and inflation is still too high.

• Local business contacts suggest it is the right moment for the Fed to raise rates to tame inflation.

The latest remarks echo a stance Hammack voiced recently: https://investinglive.com/central-banks/fed-s-hammack-it-s-time-to-act-with-rate-hikes-waiting-will-create-pain/