Cleveland Fed President Beth Hammack reaffirmed her support for further interest rate increases to contain persistent inflation, but argued that gradual tightening through smaller, more frequent hikes remains preferable to more aggressive moves. Speaking at an Ohio State University event on Thursday, Hammack said the Fed needs to move toward a restrictive policy stance to bring inflation back to its 2% target. “If we don’t, I worry that an inflationary mindset could start taking hold,” she warned. However, despite describing recent inflation developments as “moving in the wrong direction,” she saw no immediate justification for accelerating the pace of rate increases.
Hammack emphasized that smaller steps would allow households and businesses to adjust more smoothly to higher borrowing costs. “My view is that if we go steadily in smaller increments, more frequent, smaller rises, it’s easier for businesses and households to manage around that,” she said, adding that such an approach would be less disruptive than sharper increases. She acknowledged that larger hikes could become necessary if the Fed fell behind inflation, but stressed that she did not believe this had happened. “I don’t think we’re behind the curve today,” she said, suggesting that persistent inflation alone has not yet made more aggressive tightening necessary.
Her remarks highlight a distinction within the Fed’s increasingly hawkish policy debate ahead of the December 8–9 meeting. While Governor Christopher Waller has raised the possibility of a 50bps hike in response to stronger-than-expected inflation, Hammack’s preference points toward continued tightening in smaller increments. As a voting FOMC member who dissented against holding rates unchanged in July and October, her position reflects support for higher rates rather than opposition to further action. Nevertheless, her assessment could temper expectations for a larger December move without weakening the broader case for additional tightening. Hammack also stressed that her views were conditional rather than commitments, saying she would approach each policy meeting with an open mind.
Key Takeaways
- Cleveland Fed President Beth Hammack supports further rate hikes to bring inflation back to 2%, warning that persistent price pressures could allow an inflationary mindset to take hold.
- Hammack favors smaller, more frequent rate increases over aggressive tightening. Although inflation is moving in the wrong direction, she believes the Fed is not currently behind the curve and can continue raising rates gradually.
- Her position could temper expectations for a 50bps December hike without weakening the broader tightening outlook. Unlike Governor Christopher Waller’s conditional openness to a larger increase, Hammack sees no immediate need to accelerate the pace, while emphasizing that her policy views remain data-dependent.
