The president of the Cleveland Fed warns that rate hikes are possible if inflation remains high
M2 Communities CEO Mitch Roschelle is slashing mortgage rates as war-driven inflation reaches affordability and raises questions about when relief might come to Varney & Co.
A The Federal Reserve The policymaker warns that it would make sense to raise interest rates if inflation remains above the Fed's 2% target amid uncertainty amid a period of oil and gas price shocks.
Federal Reserve Bank of Cleveland's Beth Hammack said in an interview with the Associated Press that she sees the central bank leaving the federal funds rate at its current level of 3.5% to 3.75% “for a long time.”
Hammack also warned that while the Fed's next move may be toned down due to labor market concerns, it may be to raise rates to contain it. stubborn inflation.
Cleveland Fed President Beth Hammack said the Fed may need to raise rates to control inflation, or it may be forced to cut rates to support the labor market. (Victor J. Blue/Bloomberg via Getty Images)
“I can see situations where we might need to lower rates … if the labor market gets worse,” Hammack told the AP. “Or I realized that we may need to raise rates if inflation remains above our target.”
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Hammack noted that the Cleveland Fed's inflation estimates show it could rise to 3.5% in April. That would amount to the highest reading of inflation since 2024 and the biggest increase from Consumer price index the latest reading was 2.4% in February.
“Inflation is well over our five-year target now,” Hammack said in an interview, adding that further increases would mean inflation is “moving in the wrong direction, away from our 2% target.”
Hammack said the surgery went well electricity prices caused by the Iran war is “the No. 1 thing” he hears when he talks to people inside his district, adding that he and other policymakers “know that it's causing a lot of pain personally, as it eats up a bigger and bigger part of people's paychecks. So it's important that we stay focused on it.”
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The president of the Cleveland Fed – who is also a voting member of the central bank's Federal Open Market Committee (FOMC) which makes interest rate decisions – said The war in Iran the economic impact will depend on how long it lasts.
If higher energy costs cause consumers to hold back on spending, it can slow economic growth and cause businesses to lay off, prompting the Fed to lower interest rates to support labor market.
IRAN WAR COULD PUSH INFLATION HIGHER THIS YEAR, GOLDMAN SACHS SAYS
Federal Reserve Chairman Jerome Powell said last month that it was uncertain how a war with Iran would affect the economy. (Amanda Andrade-Rhoades/Reuters)
Fed policymakers will receive two sets of new inflation data this week, starting with the Commerce Department's personal consumption expenditures (PCE) index for February that will be released on Thursday. The PCE index is the Fed's preferred inflation gauge and the February edition of the report was delayed by the government shutdown.
Additionally, the Ministry of Labor will release the inflation index (CPI) report for March on Friday.
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The FOMC will hold its next monetary policy meeting on April 28-29, when it will announce whether the benchmark interest rate will be held on hold, raised or cut.
Policymakers left interest rates unchanged at their most recent meeting in March, after doing the same at the previous FOMC meeting in January.
