Fed's Hammack (2026 voter) says the biggest risk with inflation is the formation of an inflationary mindset

Economy Public has been dealing with above target inflation for continued period. Growth has held up well, job market is stable. Worries about demand-relatedAI pressure on inflation. If we don't make progress lowering inflation, expectations could shift Capital expenditures will pressure inflation for a while There are lots of long term questions what AI will mean for inflation It is likely that underlying inflation is above target. US is on an unsustainable fiscal path inflation expectations are 'reasonably well' anchored Policy Fed needs to make sure policy is at a restrictive stance to lower inflation. Fed policy is not restraining activity outside of housing. Does not see current policy as restraining the economy. Is mindful of financial conditions, but Fed is the decision maker on monetary policy. Bonds Some of what bond market is doing is in reaction to Fed, government policy. Climbing bond yields driven by a number of factors. Good economic outlook is pressuring up bond yields AI investment demand is competing for investors in the bond market