On August 13, Cleveland Fed President Beth Hammack, a current voting member of the FOMC, and Richmond Fed President Tom Barkin, an alternate voter this year, each delivered remarks. With the U.S. economy still showing resilience and inflation persistently above target, the two officials signaled different policy stances.
Hammack struck a distinctly hawkish tone in her speech. She stated that U.S. monetary policy remains insufficiently restrictive, inflation has consistently deviated from the Fed's 2% target, and the labor market is broadly stable, so the Fed still needs to tighten policy further to curb inflation. Regarding the widely debated question of whether the Fed might raise its inflation target, Hammack gave a clear "no," emphasizing that the 2% inflation target is unchanged. She argued that corporate financing, investment, and credit activity are still relatively active, suggesting the economy still has room to cool.
Compared to Hammack, Barkin adopted a more cautious stance on whether to raise rates next. He described the current U.S. economy as a "mystery novel" and posed four questions: Why is the economy persistently resilient? Why is corporate investment staying strong? Why is the labor market still stable? And why hasn't inflation returned to 2%? Barkin noted that despite weak consumer sentiment, U.S. economic growth remains above its long-term trend, and investment linked to artificial intelligence remains robust. At the same time, both hiring and layoffs are at low levels, keeping the labor market relatively stable.
On inflation, Barkin pointed out that the FOMC has clearly committed to bringing inflation back to the 2% target, but the suspense lies in "how to get there"—whether the current interest rate is enough to suppress it, or if further hikes are needed. He outlined two opposing views: optimists believe the shocks will fade, while pessimists worry inflation has become entrenched. However, he did not reveal his specific judgment on the next rate move, saying he would continue to seek clues from economic data and business feedback.
The latest inflation data also provides context for both policy views. Data released by the U.S. Bureau of Labor Statistics on August 12 showed that the July CPI rose 3.4% year-over-year, and core CPI rose 2.5% year-over-year, down from June's 3.5% and 2.6%, respectively, but still above the Fed's 2% inflation target.
Market attention is now shifting to the Fed's September policy meeting. The FOMC is scheduled to meet on September 15-16. Against a backdrop where inflation remains above target but recent data has not shown a clear deterioration, the divergence within the Fed between "hiking" and "holding rates steady" will continue to draw market focus.
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