Beth Hammack has been Cleveland Fed president for almost two years. In that time, she has heard a lot from business owners and community leaders about rising prices. Now she is putting that worry into plain words.
On July 17, Hammack wrote on LinkedIn that inflation is still elevated and the labor market has reached what she considers full employment. That means the Fed's two main jobs - keeping prices stable and keeping people working - are not pulling in opposite directions right now. "There is no conflict in our mandate," she wrote. "Inflation is too high. The labor market is right around my level of maximum employment."
That is a sharp way of saying the central bank has room to act if it needs to. And a lot of people think it might need to.
Hammack also shared something she does not usually hear. "For the first time in my tenure, I'm hearing from businesses who say they think we need to take action to curb inflation, and from consumers who can't make ends meet about a growing sense of despair." That first-hand feedback from the real economy carries weight with Fed officials.
The numbers back up the concern. At the June meeting of the Federal Open Market Committee - the group that sets interest rates - 18 policymakers updated their economic projections.
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That split inside the committee tells you this is not a fringe view.
Logan stated on Thursday that the central bank should raise rates because inflation is not moving sustainably toward 2%. She also votes on rate decisions this year.
So you have two voting members of the FOMC openly signaling that rates may need to go up. And they are not alone. An increasing number of Fed policymakers have cautioned that the central bank might need to raise rates soon if inflation fails to fall towards their 2% target.
The Fed's inflation target is 2%. Right now, the economy is not hitting that. Consumer spending is still strong.
Unemployment is low. And price pressures keep showing up in energy costs, supply chain problems, insurance premiums, and the AI boom.
Hammack says she goes into every meeting with an open mind. "I go into every FOMC meeting with an open mind and one goal - to deliver the best outcomes for the American people." That is a reminder that the people setting rates are not robots. They are listening to what businesses and consumers are saying. And right now, what they are hearing is that higher prices are squeezing people hard.
The key here is not to make a dramatic move. It is to pay attention. The Fed is watching, and it is ready to act.
That is what the central bank does. The real question is whether inflation will ease on its own or force the Fed's hand.
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