Cleveland Fed President Beth Hammack backs further rate increases but sees no need to speed up. She prefers smaller, more frequent hikes, even as Governor Christopher Waller floats a half-point move for December.
Cleveland Fed President Beth Hammack reiterated her call for higher interest rates on Thursday, arguing that the Fed should favor steady, incremental increases over abrupt shifts. Investing.com reported that she linked persistent price pressures to artificial intelligence infrastructure investments.
Hammack wants a restrictive stance to return inflation to 2%
Speaking at an Ohio State University event, Hammack said the central bank must adopt a restrictive policy stance to return price growth to its 2% target before an inflationary mindset becomes entrenched. Underlying inflation rose faster than anticipated in October, and she warned that disinflationary progress has stalled.
However, she does not think the Fed has fallen behind. According to Reuters: "I don’t think we’re behind the curve today", Hammack said, adding that larger moves could be on the table if that changes.
Smaller steps instead of a half-point hike
Hammack argued that smaller, more frequent adjustments let businesses and households adapt with less economic disruption. She dissented against the Fed's October decision to hold its benchmark rate steady, favoring a quarter-point rate hike instead.
Her stance contrasts with Governor Christopher Waller, who warned earlier this week that policymakers may need to weigh a half-point hike in December. Reuters reported that the Fed is widely expected to raise rates by a quarter of a percentage point at its December 8-9 meeting.
Her views are conditional
Hammack cautioned that her expectations are not commitments. She said she walks into every meeting with an open mind and will listen to other Fed officials.
Sources: Investing.com, Reuters
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