Federal Reserve Bank of Cleveland President Beth Hammack warned that inflation above the Federal Reserve’s 2% target for more than five years could normalize elevated prices and alter how businesses and households behave. She said monetary policy remains insufficiently restrictive and should help return inflation to target, though she did not specify her preferred next move on interest rates. The personal consumption expenditures price index rose 3.7% in July from a year earlier. The Fed raised its target rate range by a quarter percentage point earlier this month, to 3.75%-4%, and officials indicated another increase before year-end, while markets expect more than one additional hike. Hammack attributed inflation not only to shocks including trade tariffs and energy effects from the Iran war, but also to strong demand supported by economic performance and a stable labor market. She said inflation expectations remain reasonably anchored, while higher government bond yields have reflected rising real rates, a solid economic outlook, strong technology-sector investment competing for investor funds, and repricing around the monetary policy outlook.