Cleveland Fed’s Beth Hammack Reiterates Her Call For Rate Hikes, Says ‘Now Is The Time To Act’

Cleveland Federal Reserve President Beth Hammack reiterated her call for a hike of interest rates on Thursday.

Speaking from Jackson Hole, where the central bank's annual symposium takes place, Hammack said "now is the time to act" on the matter.

"I believe that we've been in an inflationary situation for more than five years. It's been running well above our target. I don't see any restriction in policy when I look at financial conditions and when I talk to market participants," she added.

Hammack had already voted to hike interest rates and has claimed more than one could be needed. "In general, one 25 basis point move probably doesn't do a whole lot for the economy," she said earlier this month.

"So it's probably some number of [movements]. But I don't want to prejudge what that number is going to be," she added, saying she doesn't "know exactly where we will end."

Kansas City Federal Reserve President Jeffrey Schmid also said on Thursday that inflation is "still stubborn and it's still sticky," and the central bank has not yet managed to "break through."

Schmidt, who does not vote on FOMC decisions, added that Fed members will "have our work cut out for us as we move into the cycle."

He went on to say "I don't know what we're restricting currently with the rate policy that we're at today," but "I do know moving the rate does change behaviors in the market in a macro level market."

"I think we need a little bit more information. What I'm trying to figure out is the demand side of what's driving both growth and inflation," Schmid added.

The remarks came after the central bank's preferred inflation gauge rose 0.2% in July, in line with forecasts from analysts.

Concretely, the core personal consumption expenditures price index gained 0.2% last month and clocked in at 3.3% for the year, data from the Department of Commerce showed.

The index that does not exclude more volatile components like food and energy also rose 0.2% and put the annual inflation rate at 3.7%, above analysts' expectations.

Elsewhere, the report showed that personal income rose 0.4% and spending gained 0.2%. Both figures were stronger than previous expectations.

The central bank kept rates unchanged in its July meeting, but three officials voted for a hike. The minutes released last week showed that members of the Federal Open Market Committee said they would need to hike rates unless inflation cools over the next months.

"Many participants assessed that policy tightening would likely be necessary if inflation did not decline," reads a passage of the meeting's summary.

"Some participants commented that financial conditions might not currently be sufficiently restrictive to facilitate a return of inflation to 2 percent."

The minutes addressed the vote of the dissenters, who claimed that hiking rates "would likely help forestall the need for a steeper and potentially more costly sequence of tightening moves at a later stage."