Cleveland Fed President Beth Hammack stated that interest rates need to be restrictive in order to bring inflation back down to the central bank's target, and that more frequent adjustments can reduce the risk of policy falling behind the curve.
"I expect monetary policy will need to move to a restrictive stance to bring inflation back to 2% in a timely manner," Hammack said Thursday in prepared remarks for an event in Zurich, adding that she favors "more frequent, smaller adjustments when possible."
"This approach can also reduce the risk of policy lagging behind what is actually needed and of inflation psychology becoming entrenched," she added.
Cleveland Fed President Beth Hammack was one of two Fed officials who dissented last week when policymakers voted to keep the benchmark rate unchanged following strong inflation data.
Since the meeting, several other officials have advocated for a gradual tightening of policy to limit the impact on financial markets and the economy.
According to futures contract pricing, investors believe the Fed may raise rates in December and again in March of next year.
Hammack also discussed the dominance of the dollar. She said the dollar "plays a central role in global foreign exchange transactions."
She stated that the dollar's reserve currency status depends on the sound rule of law in the United States, its large and highly liquid financial markets, and the independence of the central bank.
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