Cleveland Federal Reserve Bank Governor Beth Hammark said that the US economy is facing a series of supply shocks, which increase the risk of a solidification of the inflationary mentality. Hamak said at a meeting hosted by the Cleveland Federal Reserve on Thursday: “The inflation outlook remains highly uncertain, and risks are biased towards the upside.” She said, “A particularly difficult issue facing monetary policy is the recent shocks that have continued to occur one after another, including supply-side shocks caused by tariffs and oil prices, as well as demand-side shocks caused by the boom in capital expenditure related to artificial intelligence.” “According to the traditional view, monetary policy should ignore supply shocks,” Hamak said, “but if the economic environment is more vulnerable to shocks, or if inflation has been high for many years and various shocks follow, then the risk of the inflationary mentality solidification will be even higher.” “The longer high inflation continues, the more difficult and costly it may be to push it down again,” she said.

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