Hammack Sounds Hawkish Warning on Sticky Inflation and Rate Hikes

Cleveland Fed President Beth Hammack sounded a warning about sticky US inflation, saying it could complicate the Federal Reserve's goal of returning to its 2% target. She pointed out that price stability lies with central banks and noted that supply shocks pose a challenge for monetary policy.

Hammack also stated that inflation risks are tilted to the upside and warned that the longer above-target inflation persists, the more difficult it becomes to bring price growth back down. The market gauges portrayed her remarks as hawkish but slightly softer than usual.

The US Dollar Index showed little reaction to Hammack's comments, remaining up 0.14% at around 101.25. The CME FedWatch tool put the probability of an October rate hike at roughly 71%, up from about 55% a week earlier.