Hammack: US Economy Needs Policy Restrictiveness to Maintain Balance

Cleveland Federal Reserve President Beth Hammack emphasized that policy restrictiveness is still necessary in a recent interview on Fox Business. She stated, 'we need restrictiveness in policy,' indicating that monetary tightening is required to maintain economic balance.

Hammack noted that the job market is broadly in balance but expressed concerns about inflation. She predicted that inflation might end the year around 3% and could ease to around 2.5% at best next year.

The Federal Reserve's dual mandate includes achieving price stability and fostering full employment. To achieve these goals, policymakers adjust interest rates, which in turn affects borrowing costs and the value of the US dollar.