Several Federal Reserve policymakers have lost confidence that inflation will return to the bank's 2% inflation on its own without intervention.
Cleveland Fed President Beth Hammack, Dallas Fed President Lorie Logan, and Minneapolis Fed President Neel Kashkari dissented from the Federal Open Market Committee's decision to hold interest rates steady on Wednesday in favor of a quarter-point increase, which would lift the fed-funds rate to target range of 3.75%-4.00%.
Hammack said Friday that she supported a rate hike because she was no longer confident that inflation will return to the Fed's objective on its own.
"In my view, now is the time for the FOMC to act to speed the return of PCE inflation to our 2% objective and deliver on our commitment to price stability for the American people," Hammack wrote in a statement released Friday. "The longer that high inflation persists, the more challenging and costly it can be to bring it back down."
Hammack added that she preferred to move at the FOMC's recent meeting because she did not see the current policy stance as appropriately restrictive. "Supply-side factors, including energy prices, have boosted inflation this year, but I see inflationary pressures coming from the demand side of the economy," Hammack wrote. She says businesses are telling her that pricing pressures are broadening rather than fading.
Minneapolis Fed's Kashkari said Friday that while he ascribes to the economic practice of "looking through" the inflationary effects of supply shocks, he's also concerned that the successive number of events the U.S. has experienced in recent years could lead to entrenched inflation.
"To manage against the risk that high inflation could become entrenched, I would rather tighten policy incrementally as we gather the data on the path of inflation and employment," Kashkari wrote in a statement released Friday.
Kashkari said that if inflation remains elevated, he believes the right policy move would be to implement a series of small rate hikes, as opposed to waiting and then concluding "even bolder actions were necessary."
Dallas Fed President Logan didn't immediately release a statement explaining her vote on Friday.
Prior to Wednesday's meeting, Logan had said she believed that "modestly" higher interest rates would generate a better balance between economic risks and the Fed's mandates to stabilize prices and maximize employment.
"Inflation has been too high, for too long, and does not appear to be on track all the way back to 2%. And the inflation risks are to the upside, " Logan said during a July 16 speech.
Hammack, Kashkari and Logan all previously dissented in April. While they supported the central bank's interest-rate decision, they did not support inclusion of an easing bias in the statement.
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