During her remarks on Tuesday, Federal Reserve Bank of Cleveland member Beth Hammack stated that it is unclear whether inflation will continue to decline towards the Federal Reserve's target of 2%.
Hammack warned that while the U.S. economy is emerging from a period of high inflation, the risks still tend to lean towards the higher side regarding inflation, indicating that the Federal Reserve will need to keep interest rates steady for a while while it assesses its upcoming moves.
Additionally, Hammack's statements covered the following:
The U.S. economy remains strong. The labor market in the United States is in very good shape. The labor market has slowed somewhat over the past two years, leading to slower wage growth and helping to reduce inflation. There is a high degree of uncertainty regarding the impact of Trump administration policies, but it is better for the Federal Reserve to take the necessary time to assess the impact of tariffs on the domestic economy. Raising interest rates is not the baseline scenario in my expectations. We will assess Trump's economic and trade policies as soon as they are issued. It is unclear how much last year's interest rate cuts have affected the economy. We may be close to the neutral interest rate. Housing has been the most challenging part of the inflation equation recently. Inflation pressures in the housing sector may be about to slow down.
