Fed's Hammack favors gradual rate-hike path to lower inflation
TLT•Cleveland Fed President Beth Hammack said more rate increases are needed to bring inflation to the Fed’s 2% target, favoring smaller, more frequent adjustments when possible. She also said the dollar’s reserve-currency role is unlikely to change imminently.
1. Hammack backs gradual hikes
Hammack said monetary policy will need to become restrictive to bring inflation back to 2% in a timely manner. She favors getting there through more frequent, smaller adjustments when possible, which she said would be less disruptive and reduce the risk of inflation expectations taking hold.
2. Fed left rates unchanged
The Fed last week held its benchmark rate at 3.75%-4.00%, despite acknowledging that inflation was too high. Hammack and Fed Governor Lisa Cook dissented in favor of a hike; financial markets broadly expect another increase in December.
3. Dollar retains global role
Hammack said the dollar remains the world’s reserve currency by a wide margin and that she does not foresee its role changing imminently. She said cryptocurrency volatility makes it a less certain store of value and that she remains skeptical it poses a threat to the dollar’s status.
