Fed's Hammack (2026 voter, hawk) says the key piece of information is how high energy prices get to, and how long they remain there for; high energy could bring inflation higher, but it could also hit growth; thinks rates are in a good place

Policy Decisions

• Baseline is staying on hold for a while.
• There are two-way risks for monetary policy.
• Will be watching data
• There are risks Fed could go either way with rates, but base case is to be on hold for some time.
• It is a tough time for monetary policy.
• Normally like to look through supply shocks, supply shocks are tricky for mon pol.

Mandate

• Concerned about both sides of mandate. Job market is in reasonable balance. Fed has been missing inflation target for five years.
• Consumers have been facing extended period of elevated inflation.
• Still persistently missing on inflation target. Sees labour market reasonably in balance.
• Does not see job market as source of inflationary pressure.
• Fed must maintain inflation expectations. Looks reasonably well contained.
• Fed doing best it can do balance the mandate.

AI

• Unclear of AI impact on economy, could boost productivity, it could hit jobs.

Fed independence

• It is very important.
• Fed is independent on policy.
• Fed is focused on doing its job.

Balance sheet

• Has vigorous discussions on balance sheet.
• Looks forward to further debates on balance sheet.
• It is a tool to maintain rate control.
• Reserve demand issues are key to Fed balance sheet size.
• Banks need to demand fewer reserves if  you want to reduce size of balance sheet.
• Must strike a balance between reputational benefits and financial stability benefits.