Cleveland Fed President Beth Hammack reiterated that she believes interest rates need to be raised to fight inflation amid demand pressures stemming from artificial intelligence investment.
"My expectation is that we need to shift policy to a restrictive stance to help bring inflation back down to our 2% goal, and that is essential," Hammack said Thursday at an event in Columbus, Ohio. "If we don't do that, I worry that inflation thinking may begin to take root."
Hammack said the Fed is well positioned to respond to the demand pressures created by data center construction. "When I weigh these factors, what I see is that inflation has been stubborn and has lasted longer than I expected," she said.
Watch: Core inflation, which strips out food and energy prices, rose more than expected in October. Hammack said the report showed that progress on inflation has "really stalled."
"The latest data I see shows inflation is moving in the wrong direction. We are moving away from the 2% target, not toward it," she said.
Last month the Fed decided to keep interest rates unchanged in the 3.75%-4% range, and Hammack was one of two officials who dissented. At the time, she favored a 25 basis point rate hike.
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