Fed’s Hammack: Elevated services inflation is a concern

Federal Reserve Bank of Cleveland Beth Hammack struck a cautious tone in remarks on Monday, underscoring persistent inflation pressures and emerging strains in the labour market. She warned that inflation remains too high, with tariffs and sticky services costs playing a central role, and stressed the importance of keeping expectations anchored.

Key Quotes

Inflation is too high, and the trend is in the wrong direction.

Tariffs are a big part of the inflation story.

Elevated services inflation is a real concern.

Right now is challenging for the Fed, being challenged on both mandates.

I expect 2% inflation in 2027.

I see fragility in job market data.

Something is changing in the labour market.

Job market is still a low-hiring, low-firing environment.

Important to keep inflation expectations in check.

Inflation expectations are anchored, but there are some signs of worry.

Inflation is a bigger concern right now than the job market.

I will be open-minded about the economy's performance.

Restrictive monetary policy is needed to cool inflation.