Fed's Hamack warns of inflation risks and calls for cautious withdrawal of restrictive policies

[Fed Harker Warns of Inflation Risks, Calls for Caution in Withdrawing Restrictive Policies] Cleveland Fed President Harker said on Monday that the Fed needs to be "very cautious" when unwinding restrictive monetary policy as inflation remains above the Fed's 2% target and persists stubbornly. "I think we are only a short distance from a neutral Intrerest Rate, and if we remove this constraint on the economy, I worry it will overheat again," Harker, one of the most hawkish officials, who does not have voting rights this year, did not explicitly state whether she supports last week's rate cut. She emphasized that inflation remains a significant concern for her, while the labor market is still close to the Fed's maximum employment goal. Harker expects the unemployment rate to rise slightly this year, but to fall again shortly thereafter. "In terms of inflation, we have deviated further from the target, missing it by a full percentage point. And we have not met the target for four and a half years in a row, and we expect to continue to deviate in the coming years."