Core Viewpoint - The Federal Reserve must exercise caution in adjusting its restrictive monetary policy due to persistent inflation above the 2% target, as emphasized by Cleveland Fed President Beth Hammack [1][5]. Group 1: Monetary Policy and Interest Rates - The Federal Open Market Committee recently lowered the benchmark interest rate by a quarter-percentage point to a range of 4.00%-to-4.25% [3]. - Hammack expressed concerns that removing restrictions could lead to economic overheating, indicating divisions within the Fed regarding future interest rate reductions [2][4]. - The median expectation among Fed officials suggests a potential further drop in rates by half a percentage point this year, though nearly half of the officials do not find this appropriate [7]. Group 2: Inflation and Employment - Hammack highlighted that inflation remains a significant concern, with current levels missing the target by a full percentage point for over four years, and she anticipates this trend to continue for the next couple of years [5]. - The unemployment rate is currently at 4.3%, which Hammack considers close to the maximum employment number, although she notes signs of fragility in the job market [4][5].