MNI BRIEF: Hammack: Fed Should Be 'Very Cautious' In Easing

The Federal Reserve needs to lower rates cautiously as U.S. monetary policy is "only very mildly restrictive" with inflation still more than a full percentage point from goal, Cleveland Fed President Beth Hammack said Monday after the FOMC resumed rate cuts after a nine-month pause. 

Unemployment at 4.3% is "right around a maximum employment type number" but inflation has missed its target for more than four years and will continue to stay above target for the next couple years, she noted. Early next year the economy could see another wave of pricing pressures as contracts are renegotiated and "that's something we need to continue to watch," she said. "That's why I'm laser focused on inflation, and that's why I think we should be very cautious in removing monetary policy restriction," she said at a Cleveland Fed event. (See: MNI INTERVIEW: Fed Easing Constrained By High Inflation-Sahm)