Cleveland Fed President Hammack said the labor market is near full employment and the Fed may need to raise rates if inflation stays high; traders price about 15% odds of a July hike and 65% for September.
Cleveland Fed President Hammack said persistently high inflation remains the bigger concern, with the labor market near full employment and no conflict between the Federal Reserve’s dual mandate. She said the current nowcast for core PCE, the Personal Consumption Expenditures price index excluding food and energy, is 3.3%, and indicated the Fed may need to raise interest rates if inflation stays elevated. Interest-rate futures traders were pricing about a 15% chance of a July hike and about a 65% chance of a September increase, according to Jin10.