In an interview with The New York Times published Wednesday, Cleveland Fed President Beth Hammack said it was too early to gauge the economic impact of the Iran war and supported keeping interest rates on hold for “a significant period of time.”
“It is important that we maintain policy at a level that allows us to bring inflation down to our target, while balancing any potential softening in the labor market,” he said. Federal Reserve officials on Tuesday began acknowledging that escalating conflicts in the Middle East could pose near-term risks to both U.S. inflation and growth, despite the economy’s relative resilience to energy price shocks.
Hammack also said he expected inflation to ease gradually over the summer but remain above target through the end of the year.
Hammack told the newspaper that the central bank needed to remain focused on eliminating price pressures because inflation was too high and the labor market was relatively stable.
“If we see further weakness in the labor market, it could mean we need to provide further easing. If inflation is not on target as I expect, it could mean we need to impose further restrictions on the economy,” he was quoted as saying.
(Reporting by Chandni Shah in Bengaluru; Editing by Andrew Heavens and Andrei Kalip)
