Lates News

Cleveland Fed President Beth Hammack said the recent sharp rise in U.S. Treasury yields was not due to the market losing confidence in inflation falling back, but was mainly driven by factors including higher real interest rates, a strong economic outlook, fiscal policy, and competition for investor funds. She said inflation expectations remain "largely well anchored," but inflation persistently above the Fed's 2% target still carries real costs and could affect economic planning and wage pressures. Hammack said the biggest inflation risk right now is the emergence of an "inflation mindset," in which the public begins to believe high inflation will persist over the long term. She noted that inflation has been above target for several consecutive years, and the Fed needs to ensure monetary policy remains restrictive to bring inflation back down to the 2% target. On the bond market, Hammack said the rise in yields partly reflects the market repricing Fed policy and government fiscal policy, while investment demand from AI and the technology sector is also competing with the bond market for investment funds. She also said the current U.S. fiscal path is unsustainable.