Hammack Warns Inflation Could Become Entrenched in US Economy

Federal Reserve Bank of Cleveland President Beth Hammack expressed concern that persistently high inflation could lead to entrenched expectations in the economy. She warned that Americans may become accustomed to elevated prices, making it harder for the Fed to bring inflation back down.

Hammack noted that personal consumption expenditures (PCE) price index rose 3.7% in July from a year earlier, exceeding the Fed's target of 2%. The underlying inflation also remained above the central bank's goal.

The Fed raised its benchmark interest-rate target by a quarter percentage point earlier this month to a range of 3.75% to 4%. Hammack stopped short of specifying what action she believes the central bank should take on interest rates during her latest appearance.