Cleveland Fed President Beth Hammack warned that the Fed may need to raise rates again, using smaller, quicker moves to avoid an entrenched “inflationary mindset.” She said a restrictive stance is needed to bring inflation back to the 2% goal.
What happened
On Monday, Beth Hammack, president of the Federal Reserve Bank of Cleveland, told the National Association of Business Economics that the Fed might need to continue tightening monetary policyMonetary policy is how the central bank controls interest rates and money supply to influence the economy. . She emphasized making “smaller adjustments, and to do so relatively quickly,” rather than waiting for a larger correction later.
Hammack’s remarks came after September meeting minutes showed Fed officials could vote for another rate hike, but without a clear timeline. The Fed had just voted to raise rates for the first time in three years.
Traders, using the CME’s FedWatch toolFedWatch tool is a market tracker that estimates the probability of Fed rate changes based on futures prices. , saw a 78% chance rates stay steady at the upcoming meeting, but an 88% chance of a hike at the December meeting.
Current inflation data show the personal consumption expenditures price index at 3.4% year‑over‑year, with the
core readingCore reading is the inflation measure that excludes volatile food and energy prices.