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Cleveland Fed President Beth Hammack reiterated her hawkish stance on interest rates at the Federal Reserve's annual symposium in Jackson Hole, Wyoming. Hammack said Wednesday's data showed annualized inflation running at about 3%, signaling that the US central bank is still far from its target.

Hammack said, "It's time to act now."

Hammack, who has voting rights on the Fed's policy committee this year, argued that monetary policy should be tightened further even as the pace of monthly price increases has slowed in recent months. Looking at financial conditions and her conversations with market participants, she said the current stance does not appear restrictive enough.

At its July meeting, the Federal Open Market Committee left the benchmark interest rate unchanged at 3.5%-3.75%. Hammack was one of three dissenters, and the group favored a 25-basis-point rate increase.

Inflation pressure is straining budgets

Hammack warned that inflation remaining above target for an extended period could make it even harder to bring price pressures down. She said the process could put more strain on household budgets and businesses, while also increasing the risk that persistent inflation expectations take hold across society.

Inflation has been pushed higher this year by the war in Iran, tariffs and demand linked to artificial intelligence, according to assessments. While Fed officials generally respond only limitedly to shocks they consider supply-side and temporary, some policymakers are worried those effects could become embedded across the economy.

Markets expect a later move

Market pricing points to a different picture from Hammack's hawkish tone. Current expectations suggest the Fed will keep rates unchanged at its September and October meetings, with the next possible hike not coming until December.

Hammack's comments suggest the more aggressive camp inside the Fed still has influence in the fight against inflation, while markets continue to price a more cautious path between the growth outlook and price pressures.

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