Cleveland Fed President Beth Hammack said her biggest concern right now is that the public could start expecting inflation to stay elevated, after price growth has run above the Federal Reserve's 2% target for more than five years. She said growth and the job market remain stable, but demand and capital spending will keep pressuring inflation for a while.
Fed sees a shifting mindset as the real risk
Speaking at an event at her bank, Hammack said her biggest worry is that "an inflationary mindset could start to set in." She noted that inflation has stayed above the Federal Reserve's 2% target for more than five years, and warned that if progress on bringing it down stalls, public expectations could shift.
Hammack said the central bank has a role to play in preventing that shift. She added that policy needs to stay at a restrictive stance to help bring inflation back down to target.
Growth holds up even as demand pressures persist
The Cleveland Fed president said growth has held up well and the job market is stable. Even so, she expressed concerns about demand-related pressure on inflation and said capital expenditures will keep pressuring inflation for a while.
Long-term questions remain about AI's effect on prices
Hammack also said there are still many long-term questions about what artificial intelligence will mean for inflation.
Source: Economy News (Investing.com)
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