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2026-11-05 21:52:32
[Cleveland Fed President Hammarck: Inclined Towards Gradual Rate Hikes, Policy Needs to Shift to a Restrictive Stance] ⑴ Cleveland Fed President Hammarck said on Thursday that the US central bank has more work to do in bringing inflation down to its 2% target, as price pressures remain unacceptably high. ⑵ In prepared remarks for an event in Zurich, Hammarck said he expects monetary policy to need to shift to a restrictive stance in order to push inflation back to 2% in a timely manner. ⑶ Hammarck did not specify when he hopes the Fed will raise rates again, but indicated a preference for achieving this stance through more frequent, small adjustments when possible, which would have less disruption to households, businesses, and financial markets. ⑷ Hammarck stated that gradual rate hikes would also reduce the risk of policy falling behind its proper level and the risk of an inflationary mindset taking hold. ⑸ The Fed kept its benchmark interest rate unchanged last week in the 3.75% to 4.00% range, despite policymakers acknowledging that inflation was too high. The Fed raised rates in September, and financial markets widely expect another rate hike in December. (6) Hammark and Federal Reserve Governor Cook dissented last week and supported raising interest rates. Hammark also voted against the Fed keeping rates unchanged at the end of July, arguing that monetary policy and broader financial conditions were not providing the necessary constraints on the economy, meaning the Fed needed to push up short-term borrowing costs. (7) Hammark stated that central bank independence is crucial for achieving stable inflation, and that the Fed has earned credibility as an institution operating based on evidence and economic data rather than political pressure.
