Hammack says Fed policy isn't restraining activity outside housing
Published
Federal Reserve official Beth Hammack said Friday that the central bank's policy restraint is showing up mainly in the housing market, with little sign of a slowdown elsewhere in the economy.
Hammack said underlying inflation likely remains above the Fed's target. She said the rate outlook could shift if progress on inflation stalls, and that the biggest risk facing the Fed is an inflationary mindset taking hold among households and businesses.
Her comment that restraint is largely confined to housing sits awkwardly next to the Fed's broader message that inflation pressures remain persistent and that further rate increases may be needed. If tightening is working in housing while price pressures stay sticky elsewhere, it narrows the tools the Fed has to bring inflation down, and suggests rate hikes on their own may not be enough to finish the job. That leaves the central bank with a harder set of choices ahead.