Hawkish signals reemerge! Cleveland Fed President Harker says inflation remains a major concern.

Cleveland Federal Reserve President, Loretta Mester, said that amidst resilient consumer spending and low unemployment rates, the persistent high inflation is currently her main concern. Mester wrote in an article posted on LinkedIn on Friday, "The Fed's dual mandate is not currently in conflict. Inflation remains too high, while the labor market is roughly at what I consider to be full employment." Mester's latest statement follows hawkish signals recently released by several Fed officials. Dallas Federal Reserve President Robert Kaplan stated on Thursday that current inflation does not appear to have continued to fall to the Fed's target level of 2%, therefore, it is necessary to further raise interest rates. Both Mester and Kaplan have voting rights on the Federal Open Market Committee (FOMC) monetary policy this year. Mester stated that she has recently heard widespread concerns about price pressures from business and community leaders, involving various aspects such as energy costs, supply chain disruptions, increases in insurance costs, and additional spending brought on by the artificial intelligence boom. She said, "This is the first time since I took office that I have heard businesses voluntarily suggest that the Fed needs to take action to curb inflation; at the same time, some consumers who are struggling to make ends meet are displaying increasingly strong feelings of despair." Mester became President of the Cleveland Federal Reserve about two years ago. She emphasized that she will approach every FOMC meeting with an open mind and with the sole goal of achieving the most favorable outcome for the American people. Recently, more and more Fed officials have warned that if inflation does not continue to fall towards the 2% target, the Fed may soon need to raise rates again. The latest economic projections released by the Fed in June show that among the 18 policymakers, half of them expect at least one rate hike this year, with an increase of 25 basis points each time; a few officials believe that the Fed already had enough reason to raise rates at the last meeting. Fed officials are set to convene for the next monetary policy meeting in Washington on July 28th and 29th. At that time, the trend of inflation, the resilience of consumer spending, and the state of the labor market are expected to continue to be the focus of policy discussions.