Federal Reserve (Fed) Bank of Cleveland President Beth Hammack, in a fireside chat at the Economic Club of Pittsburgh on Thursday, said that the United States (US) economy has been remarkably resilient and that some of the inflation may be tariff-driven, but services inflation is a real concern.

Key takeaways

Anecdotal data has been important during government shutdown.

The US economy has been remarkably resilient.

Hears from contacts inflation too high and moving in wrong direction.

Employment side of Fed mandate challenged amid job market softening.

Current unemployment around maximum level.

Some of inflation may be tariff driven but service inflation is a real concern.

This is a difficult time for monetary policy.

Fed policy needs to remain somewhat restrictive to push inflation pressures down.

Expects tariffs to drive up inflation into early next year.

Right now job market looks balanced but there are reasons for concern.

Fed independence critically important to deliver on job, inflation mandates.

Politics plays no role in setting monetary policy.

Too soon to say what will happen with AI.

Time will tell if valuations for AI firms are right.

Monetary policy is currently barely restrictive, if at all.

Economic performance doesn't look like Fed policy is restraining it much.

Likely neutral rate has been trending upward.

It's not obvious monetary policy should be doing more now.

Expects above target inflation for two to three more years.

Fed needs to maintain some amount of policy restriction to cool inflation."