Fed's Hammack signals support for gradual rate-hike path
TLT•Cleveland Fed President Beth Hammack said gradual, smaller rate increases are more likely than aggressive hikes for now, despite persistent inflation concerns. The Fed raised its benchmark rate to 3.75%-4.00% in September, and a quarter-point increase is widely expected in December.
1. Gradual increases favored
Hammack said the Fed needs to move policy to a restrictive stance to bring inflation back to its 2% objective, but she does not believe the central bank needs to raise rates more aggressively now. She said steady, smaller increases would be easier for businesses and households to manage and less disruptive to the economy.
2. Inflation concerns persist
Hammack said recent data showed inflationary pressures moving in the wrong direction, but added that she did not think the Fed was behind the curve. She said her views were conditional expectations, not promises or commitments, and that she would approach each policy meeting with an open mind.
3. Fed policy debate
Hammack supported raising rates and dissented when the Fed held rates steady in July and October. The Fed raised its benchmark rate by a quarter point in September to 3.75%-4.00%; a quarter-point increase is widely expected at its December 8-9 meeting, while Governor Christopher Waller appeared to favor a half-point increase.
