The Fed Hamark reiterated its anti-inflation position: interest rate restrictions remain inadequate

ON 27 AUGUST, THE FED REITERATED THAT IT WAS TIME FOR OFFICIALS TO TAKE ACTION TO CONTAIN INFLATION. SHE STATED THAT CURRENT INTEREST RATES DID NOT HAVE A STRONG EFFECT ON THE ECONOMY AND COULD NOT ALLOW PRICE PRESSURES TO RECEDE. SHE SAID: “I THINK IT IS NOW APPROPRIATE TO MAINTAIN A CERTAIN DEGREE OF RESTRAINT TO HELP BRING INFLATION BACK TO THE TARGET LEVEL. THE LONGER INFLATION LASTS ABOVE OUR TARGET LEVEL, THE HARDER IT WILL BE FOR US TO BRING IT DOWN.” HAMARK WAS ONE OF THE THREE DISSENTING OFFICIALS AT THE POLICY MEETING LAST MONTH, AND SHE PREFERRED TO INCREASE INTEREST RATES BY 25 BASIS POINTS. SHE SAID: “IN MY VIEW, THE REAL PROBLEM WITH INFLATION, WHICH HAS LONG DEVIATED FROM OUR OBJECTIVES, IS THAT THE PUBLIC MAY BEGIN TO DEVELOP AN INFLATION MENTALITY.” SHE ADDED THAT SHE HAD NOT SEEN THE SITUATION HERSELF AT PRESENT, BUT THAT SHE WAS CONCERNED BY THE EXCHANGES WITH SOME. HAMARK ALSO INDICATED THAT THE PERFORMANCE OF CAPITAL MARKETS SHOWED THAT CURRENT INTEREST RATES DID NOT PUT ENOUGH PRESSURE ON CREDIT OR ECONOMIC GROWTH. SHE SAID: “WE HAVE SEEN A TRILLION-DOLLAR IPO ON THE MARKET AND A RECORD-SCALE DEBT ISSUE. FROM MY POINT OF VIEW, IT'S NOT LIKE THE ECONOMY IS LIMITED."