Headline: Hammack: US Growth Holding Up, But Inflation Risks Demand Restraint
The US economy continues to show staying power, but inflation remains uncomfortably high, according to Federal Reserve official Beth Hammack. In recent remarks, she described a challenging backdrop for monetary policy as the labor market cools and new cost pressures threaten to slow progress on price stability.
Hammack said economic activity has been more durable than many expected, yet several indicators point to persistent inflation, particularly in services. She cautioned that tariffs could add to price pressures into early next year, complicating the path back to the Fed’s 2% goal. While the job market appears broadly balanced, she noted signs of softening and suggested unemployment is near levels consistent with maximum employment—heightening the need to manage risks on both sides of the Fed’s dual mandate.
Given this mix, Hammack argued policy should remain “somewhat restrictive” to ensure inflation continues to ease. She characterized the current environment as a difficult period for setting interest rates and said it is too early to gauge how artificial intelligence will shape productivity and prices. Viewed as leaning hawkish, Hammack is slated to join the FOMC voting rotation in 2026.
Key Points: – US economy remains resilient, but inflation is still too high – Services inflation and tariffs could keep price pressures elevated into early 2026 – Labor market looks balanced but is softening; unemployment near maximum-employment estimates – Fed policy should stay restrictive to bring inflation down sustainably – AI’s macroeconomic impact remains uncertain – Hammack, seen as hawkish, will be a voting FOMC member in 2026
