Cleveland Federal Reserve President Beth Harker stated on Tuesday that U.S. inflation is already elevated with concerning trends, suggesting the Fed may need to act soon to curb upward price pressures.

In prepared remarks for the City Club of Cleveland, Harker said, "Given the current economic data, I am increasingly concerned about the risk of inflation remaining persistently high, more so than the downside risks to full employment. The current degree of monetary policy tightening may not be sufficient to bring inflation back to our 2% target."

She pointed out, "If we wait for definitive evidence that high inflation is entrenched in the economy before acting, we will likely need to make larger policy adjustments later, at a higher economic cost."

Harker noted that with considerable uncertainty in the economic outlook, maintaining the current interest rate is reasonable. However, if the recent upward trend in inflation persists, the Fed could soon be in a position to tighten policy.

The Federal Open Market Committee (FOMC) is scheduled to meet on June 16-17. Markets widely expect the policy rate to be held steady in the 3.5% to 3.75% range. Harker holds a voting seat on the FOMC this year.

This meeting will be the first chaired by Kevin Walsh since his appointment. Walsh initially advocated for rate cuts upon taking office, but this stance is difficult to implement in the current economic environment, as U.S. inflation has consistently exceeded the Fed's 2% target with ongoing price pressures.

Military conflicts in the Middle East have disrupted global energy supply chains, further fueling inflation. Many Fed officials have begun to assess that if inflation does not cool quickly, the central bank may have to raise rates in the future. Interest rate futures markets have also started pricing in the possibility of subsequent Fed rate hikes.

In her speech, Harker acknowledged, "The inflation picture is not encouraging. Inflation is high and still rising, with widespread price pressures across goods and non-housing services."

"If energy costs do not fall quickly and businesses are forced to continue raising prices, the risk of inflation remaining persistently high will increase," she added, noting that electricity, medical insurance, and software costs are major drivers of the current inflation wave.

Harker also stated that the overall U.S. economy remains resilient, with a robust labor market and an unemployment rate near full employment levels. Current financial conditions are generally supportive of economic growth and are not a drag.