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Cleveland Fed President Beth Hammack reiterated Thursday that Fed should raise rates now, arguing current policy is not providing enough restraint to bring inflation back to 2% quickly enough. Speaking at Dayton Area Chamber of Commerce in Dayton, Ohio, Hammack pointed to businesses still eager to borrow and invest, warning that excessive growth could add to price pressures. “We need to make sure that we’ve got some amount of restraint coming from policy,” she said, so inflation can move from above 3% back toward Fed’s objective.

Hammack acknowledged that inflation data have improved over past two months, but said that was not enough to convince her disinflation will persist. “I don’t have confidence that we’re going to continue to see that or that we’re going to see them low enough that it’s going to bring us back down to that 2%,” she said. She also challenged idea that Fed can tolerate a very gradual return to target, asking, “If it takes us another three or four years to get there, is that OK?” Her concern is not simply whether inflation eventually reaches 2%, but whether current policy gets there fast enough to preserve credibility.

That leaves Hammack firmly on hawkish side of Fed debate after dissenting at July meeting in favor of higher rates. She cited businesses pre-emptively raising prices because they expect future cost pressures, as well as household strain from high gasoline and living costs, as evidence that prolonged inflation carries real consequences. Her conclusion was explicit: “I think that we need to act now,” because current rates imply too slow a glide back to target. For markets, message is that two softer inflation reports have not changed her preference for immediate tightening.

Key Takeaways

• Cleveland Fed President Beth Hammack reiterated that Fed should raise rates immediately, arguing current policy is not restrictive enough to return inflation to 2% quickly enough.
• Hammack said businesses are still eager to borrow and invest, which could keep demand strong and add to price pressures.
• She acknowledged inflation has improved over past two months but said, “I don’t have confidence that we’re going to continue to see that.”
• Hammack challenged a slow return to target, asking, “If it takes us another three or four years to get there, is that OK?”
• She also warned persistent inflation may be changing business pricing behavior, with firms raising prices in anticipation of future cost pressure.
• Her conclusion was explicit: “I think that we need to act now.” That keeps her firmly among Fed’s most hawkish voices after dissenting for a hike in July.

Richmond Fed President Thomas Barkin said Thursday that it is still unclear whether Fed will need to raise rates again to bring inflation back to 2%, arguing that several recent price pressures may fade without additional tightening. In remarks prepared for delivery to Greenville Chamber of Commerce, Barkin said, “The open question is how it gets there. Will the Fed need to raise rates or is inflation already on a path down to target?” He added that “much of today’s elevated inflation level has come from shocks, which should pass,” citing tariffs, higher oil prices and AI-related demand for labor and supplies.

Barkin said that if those shocks ease, “the current level of interest rates, many think, is still restrictive enough to bring inflation down.” That framing supports case for keeping policy steady while Fed assesses whether existing restraint is sufficient. But he also warned that inflation could prove “more embedded” if supply-chain problems persist or AI investment remains strong enough to keep raising costs. Inflation having stayed above target since 2021 also creates risk of “an upward shift in the price expectations of firms and consumers.”

Comments place Barkin firmly in wait-and-see camp rather than signaling a clear preference for another hike. His message is that Fed does not need to choose between commitment to 2% inflation and policy patience: if current shocks fade, existing rates may do enough. But if inflation expectations drift higher or temporary pressures prove persistent, another increase could still become necessary. That leaves incoming inflation data and evidence on whether current cost shocks are actually dissipating as key tests for policy path.

Key Takeaways

• Richmond Fed President Tom Barkin said it is still an open question whether Fed needs another hike to return inflation to 2%.
• Barkin argued that much of current inflation reflects shocks that “should pass,” including tariffs, higher oil prices and AI-related demand for labor and supplies.
• If those pressures fade, he said current interest rates may already be restrictive enough to bring inflation down without further tightening.
• Barkin nevertheless warned that inflation could prove “more embedded” if supply disruptions persist or AI investment keeps costs elevated.
• He also highlighted risk of “an upward shift in the price expectations of firms and consumers” after years of above-target inflation.
• Overall message supports a September hold bias, while leaving another hike as a contingency if inflation expectations or underlying price pressures worsen.

US initial jobless claims rose from a revised 200K to 209K in week ending August 8, above 202K consensus, adding another mildly softer signal. Increase was 9K on week, while four-week moving average held unchanged at 199K, suggesting latest rise is noticeable but not yet evidence of a sharp deterioration in layoffs.

Continuing claims moved in opposite direction. Insured unemployment fell from a revised 1.799M to 1.777M in week ending August 1, while four-week average declined from a revised 1.79075M to 1.7855M. Insured unemployment rate was unchanged at 1.2%. That suggests labor market is not weakening uniformly: new claims picked up, but those already unemployed were not becoming more numerous.

Initial claims above expectations fit broader evidence that labor conditions have softened, but stable four-week claims and lower continuing claims argue against reading one week as a clear acceleration in job losses.

Data Summary

Key Takeaways

• Initial jobless claims rose from revised 200K to 209K, above 202K consensus, providing another mildly softer labor-market signal.
• Four-week average of initial claims was unchanged at 199K, indicating latest increase has not yet developed into a sustained rise in layoffs.
• Continuing claims fell from revised 1.799M to 1.777M, while their four-week average declined to 1.7855M.
• Insured unemployment rate held steady at 1.2%.
• Overall report is mixed rather than decisively weak: new claims increased, but continuing claims and their trend improved.

Full US jobless claims release here.