Fed's Hammack warns that inflation will probably rise further

Federal Reserve (Fed) Bank of Cleveland President Beth Hammack warned on Monday that inflation pressures will likely persist for the time being, noting challenges on both sides of the Fed's mandate to both control inflation and support the labor market.

Key Highlights

We are in a 2-speed economy, lower income households are struggling.
Rate cut last week emerged from view that balance of risks is changing.
We are being challenged on both sides of dual mandate.
Likely to see inflation continue to rise.
Headline number in payrolls indicates there is some softness there.
There are signs of fragility in labor market.
Still a low-hiring, low-firing job market, businesses reluctant to hire.
Warn notices have been stable, not trending up.
Still seeing signs of robust labor market, like openings to unemployed ratio, but infaltion remains high.
Have a lot of concern about level and persistence of inflation.
Expects unemployment to rise a bit but 4.3% now is near full employment.
We are missing on inflation by a more meaningful number.
We should be very cautious in removing policy restriction.
I have one of the higher estimates of neutral.
We are only modestly restrictive.
If we remove restriction too quickly, I am worried about inflation.

I expect another wave of price pressures early next year.
Every confidence that my colleagues and I are making decisions only on the data.
At the moment, we're seeing inflation pressure come back in goods and services.
The risk is persistent inflation could impact expectations.
I'm not hearing about significant layoffs.