Former Richmond Fed President Jeffrey Lacker has criticized the Federal Reserve's cautious approach to tackling persistent inflation, stating he expected more aggressive action by now. Inflation has remained elevated around 3% to 3.5% for an extended period, yet the Fed has not taken stronger measures, according to Lacker's remarks on CNBC.
Lacker's comments followed Wednesday's Fed decision, where two officials, Cleveland Fed President Beth Hammack and Federal Reserve Board Governor Lisa Cook, dissented in favor of a quarter-point rate hike. Cook's dissent marked her first since joining the board of governors in 2022, highlighting growing internal debate about the appropriate policy response to stubborn price pressures.
The former Fed president argued that policymakers should have reconsidered their assumptions about inflation returning quickly to the 2% target. "I would have thought that before now, earlier this year, they would have questioned the presumption they seem to have had in this whole episode about inflation coming back to 2% rapidly and taken stronger action with more alacrity," Lacker said.
When asked about the best indicators of future inflation, Lacker pointed to nominal spending data as a key concern. "You look at nominal spending, nominal GDP. Those figures are growing well above rates that are consistent with 2% inflation," he explained. "So, you get the sense that there are just more dollars being spent than the economy can supply at 2% in price growth. It needs 3% supply growth in order to supply that many dollars with what they're asking for."