Fed’s Hammack: Current policy not tight enough amid high inflation

Federal Reserve member Hammack has stated that the current monetary policy is not sufficiently restrictive in light of persistently high inflation. This announcement comes amid ongoing debates within the Federal Reserve about how to address inflationary pressures without derailing economic growth. Hammack’s remarks suggest a potential continuation or even an increase in interest rates, challenging expectations of a rate cut in upcoming meetings. This statement adds to the discourse following similar recent comments by other Federal Reserve officials. Market pricing implies that Hammack’s statement is consistent with scenarios where the Federal Reserve may maintain or raise rates, rather than cut them. The odds of a rate cut in the meetings from July to October 2026 have decreased, reflecting market expectations that the Fed will continue its current policy stance. The probability of a rate cut in the October 28 meeting is currently priced at just 0.1% YES, down from 1% the previous day. Key Takeaways Hammack’s statement suggests that the Federal Reserve may not shift to a more accommodative policy in the immediate future. Market pricing indicates decreased expectations for a rate c...