Federal Reserve Bank of Cleveland President Beth Hammack said Friday that monetary policy should remain unchanged for quite some time as inflation stays above the central bank's 2% target. Speaking at the U.S. Monetary Policy Forum in New York, Hammack emphasized that the Fed's current interest rate stance is at a neutral level that neither stimulates nor restrains economic growth.

Hammack noted that inflationary pressures remain broad-based, citing concerns about rising health insurance and electricity costs beyond tariffs. The Fed reduced its federal funds target rate range by three-quarters of a percentage point last year to between 3.5% and 3.75%, a decision Hammack previously questioned given elevated inflation. She sees two-sided risks to rates as other scenarios remain easy to envision.

The Fed's policy outlook faces additional challenges from geopolitical tensions, including President Trump's attack on Iran, which has driven up energy prices and renewed inflation fears. Hammack said she's not hearing from business contacts about any notable move away from the dollar, despite concerns about its global dominance. She added that the euro is still not ready to replace the dollar as the world's reserve currency.