Cleveland Fed president Beth Hammack said Monday that a single rate move won't be enough to bring down inflation, and that she preferred to raise rates by a quarter percentage point when the Fed held rates steady in July. The remarks land two days before the July Consumer Price Index report, which Kalshi traders are betting will come in soft.
Cleveland Federal Reserve president Beth Hammack said Monday she expects more than one interest rate hike will be needed to rein in what she called broadening inflation. She told Yahoo Finance that a single move would carry little weight for the economy.
According to Yahoo Finance: "one 25 basis point move probably doesn't do a whole lot for the economy". She added that she does not know exactly where rates will end.
Hammack dissented at the July meeting
Hammack dissented at the Fed's July policy meeting, when the Federal Open Market Committee held interest rates steady, preferring instead to raise rates by a quarter percentage point. She said she does not think rates in the range of 3.5% to 3.75% are meaningfully restricting the economy right now. Businesses, she said, are not signaling any restraint on investment based on current borrowing costs.
She warned that the longer the Fed waits, the longer it will miss its 2% inflation goal, and the harder inflation becomes to bring back down.
Inflation gauges point in different directions
The Fed's preferred gauge, the core Personal Consumption Expenditures index, stood at 3.3% as of June. Core Consumer Price Index inflation, by contrast, ran at 2.6% for June, and economists expect it ticked down again in July. If it meets expectations, that would mark two straight months of declining core CPI.
Kalshi traders bet on a soft July print
Traders on Kalshi, the CFTC-regulated prediction market, are betting Wednesday's CPI report comes in soft. As of Sunday, contracts showed a 68% probability that July's month-over-month CPI rose above 0.0%, but only an 18% chance it exceeded 0.1%. On the year-over-year side, traders priced in roughly 52-53% odds that annual CPI topped 3.3%, while the probability of clearing 3.4% dropped to just 16%.
The Bureau of Labor Statistics releases July CPI data on August 12. An 18% probability of exceeding 0.1% month-over-month CPI is not zero — surprises happen.
Sources: Yahoo Finance, Crypto Briefing
Trading involves risk.
Risk Disclaimer
