US central bank balances inflation risks against job market pressures: Cleveland Fed President

The US Federal Reserve faces challenges in formulating monetary policy amid continued inflationary pressures, following this month's interest rate cut, Cleveland Fed President Beth Hammack told CNBC on Monday.

"It's a challenging time for monetary policy. We are being challenged on both sides of our mandate," she said, referring to inflation and maximum employment.

"When I balance those two sides of our mandate, I think we really need to maintain a restrictive stance of policy so that we can get inflation back down to our goal of 2%," she said.

The Fed cut interest rates by 0.25% to a range of 4% to 4.25% earlier this month and indicated the possibility of two additional cuts before the end of the year. However, investors reduced their bets on an acceleration in the pace of monetary easing following the release of a strong set of economic data.