Fed's Hammack, Barkin favor gradual rate-hike path to lower inflation
TLT•Cleveland Fed President Beth Hammack and Richmond Fed President Thomas Barkin said gradual rate increases make sense to bring inflation back to the Fed’s 2% target. Markets still expect a December hike, with the probability around 70%, down from more than 80% on Wednesday.
1. Officials favor gradual hikes
Hammack said she expects policy to move to a restrictive stance to return inflation to 2% in a timely manner, and prefers more frequent, smaller adjustments when possible. Barkin said inflation is too high and holding in, and that a gradual pace of future rate hikes makes sense.
2. Fed policy outlook
The Fed left its benchmark rate at 3.75%-4.00% last week after raising rates in September. Hammack and Fed Governor Lisa Cook voted for a hike; financial markets broadly expect another increase in December, though the path afterward is less clear.
3. Market expectations shift
Traders put the probability of a December hike at around 70%, down from more than 80% on Wednesday. A poll of economists cited in the article sees October hiring rising by 65,000 after September’s 29,000 gain, with unemployment holding at 4.2%.
