Cleveland Fed President Hamack said that inflation has not yet returned to target levels and the Fed may need to raise interest rates. Hamak said that a 25 basis point interest rate hike would not have a significant impact on the economy, but he was unwilling to predict the specific number of rate hikes or the final level of interest rates. Hamak believes that the current interest rate range of 3.50% -3.75% has not imposed significant restrictions on the economy, and companies have not reduced their growth investments due to high interest rates. Now is the time to take action. Hamak said that the longer we wait, the more difficult it will be for inflation to return to 2%. Hamak emphasized that there are currently no obvious problems in the job market, and the July employment data will not change his focus on inflation. Hamack believes that the market can only assist the Federal Reserve and cannot replace its actions. Hammack opposed keeping interest rates unchanged at the Federal Reserve's July meeting, preferring a 25 basis point hike.
AI interpretation: This statement directly challenges the current policy consensus of maintaining interest rates unchanged and clearly sends a hawkish signal of interest rate hikes. Officials' concerns about the stickiness of inflation have transformed into an urgent need for tightening policies, directly negating the market's optimistic expectation of a peak in interest rates. The current interest rate level has been judged to lack sufficient restrictive measures, indicating that the Federal Reserve will adopt more aggressive monetary tightening measures in the future. This tough stance completely shattered the illusion of interest rate cuts, forcing the market to reprice higher terminal interest rates.
