MNI BRIEF: Fed's Hammack Says Inflation Has Been Too High

Federal Reserve Bank of Cleveland President Beth Hammack on Friday said inflation has been too high, and noted the importance of achieving price stability over the longer term in a way thatwill support the labor market. 

"Inflation has been too high, and it's been holding there at those levels for some time, but we are seeing some softening on the labor side of the economy," she said in Q&A at an University of Cincinnati event. "I am truly committed to the 2% objective. I think it's critically important that we do bring inflation back down towards our target."

"Inflation should peak somewhere in the end of the first quarter, and so if we start to see inflation coming down after that, that would give me confidence that maybe this was really coming more from tariffs," she said. Asked about how a new chair of the FOMC could impact monetary policy and whether the central bank could target a higher inflation rate, Hammack said: "I have every confidence that a new chair coming in will also be focused on a 2% inflation objective."

Still, Hammack noted some of the unique features of the moment. "There are some things that are different that we hadn't seen before. The new governor maintaining his position and affiliation with a different part of the government, that's something novel that we hadn't seen, and the President trying to fire a sitting governor, that's something that we hadn't seen," she said. 

"We take all of this in stride. The important thing is that when we walk in the room, when I walk in the room, that I'm squarely focused on the data." (See: MNI INTERVIEW: Fed Faces Politically Tumultuous Year - Bullard)