Why Cleveland Fed’s Beth Hammack Remains Worried About Inflation: ‘I’m Seeing It In The Services’

Cleveland Federal Reserve President Beth Hammack said on Monday that it is challenging to set monetary policy goals now, as the U.S. central bank looks to balance its dual mandate of protecting the labor market and curbing persistent inflation.

“I continue to be worried about where we are from an inflation perspective,” Hammack said at CNBC’s Squawk Box Europe program.

“We have been missing our mandate on the inflation side, our objective of 2%, for more than four-and-a-half years, and I continue to see that we have pressure in inflation both in the headline, in the core, and particularly, where I am worried about it, is I’m seeing it in the services,” she added.

Her remarks come after the U.S. Commerce Department's data showed that the Personal Consumption Expenditures (PCE) Index, which is the Federal Reserve’s preferred gauge of inflation, rose 0.3% for the month, taking the headline inflation to 2.7% in August.

Retail sentiment on Stocktwits about Invesco QQQ Trust Series 1 (QQQ), which tracks the Nasdaq 100, and the SPDR S&P 500 ETF Trust (SPY) was in the ‘neutral’ territory at the time of writing. Both ETFs ticked up in premarket trading on Monday.

When the interviewer asked if it would be a mistake for the Federal Reserve to slash interest rates under the current economic conditions, Hammack described it as “a challenging time for monetary policy,” before adding that policymakers are facing pressure on both sides of their mandate.

The U.S. central bank delivered a widely anticipated 25-basis-point cut earlier this month amid tepid jobs data. Economists also predict two more cuts of a similar level later this year, starting from the Fed’s next meeting in October.

However, robust consumption and economic growth figures have prompted analysts to reassess their projections.

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