Hammack Signals Hawkish Pivot as Inflation Remains Above 3%

Cleveland Federal Reserve President Beth Hammack recently stated that current monetary policy is not restrictive, citing inflation above 3% as a concern. In her LinkedIn article, she emphasized the need for tighter policy to bring inflation under control.

Hammack noted that both hard data and anecdotal reports indicate price pressures remain entrenched. She warned that prolonged inflation above the Fed's objective will make it increasingly difficult to return it to target.

As a result, market strategists are advising traders to prepare for a hawkish pivot, with interest rate hikes back on the table. The implied probability of a rate hike at the next meeting has surged from under 5% to over 35%, according to CME FedWatch data.