Key facts
- Hammack said a gradual pace is less disruptive to the economy than sharper, more aggressive movements.
- Hammack said inflation pressures are moving in the wrong direction based on recent data.
- Hammack said she does not think the Fed is behind the curve, but would consider faster action if it were.
- Hammack said her rate views are a conditional set of expectations, not promises or forward guidance.
- The Fed is widely expected to raise rates by a quarter point at its December 8-9 meeting.
Cleveland Federal Reserve President Beth Hammack said on November 12 that the US central bank does not need to shift to more aggressive interest rate rises to combat still-high and broadening inflation. Speaking at an event at Ohio State University, Hammack said the Fed needs to move to a restrictive stance of policy to bring inflation back to its 2% objective.
"My view is that if we go steadily in smaller increments, more frequent, smaller rises, it's easier for businesses and households to manage around that," Hammack said, according to Reuters. A more gradual pace is "less disruptive to the overall economy than moving in sharper, more aggressive movements," she said.
Hammack said inflation pressures are "moving in the wrong direction" based on recent data, but added that it does not appear to be the time for the Fed to hike rates at a more aggressive pace. "If we get behind the curve, and I don't think we're behind the curve today, but if we get behind the curve, then that might be something that we need to consider," said Hammack, a voting member of the Fed's policy-setting committee.
Hammack was an early and steadfast supporter of raising rates to ease price pressures. The Fed raised its benchmark interest rate by a quarter of a percentage point to the 3.75%-4.00% range at its September meeting, but left rates steady in July and October, leading Hammack to dissent at those two meetings.
The Fed is widely expected to raise rates by a quarter of a percentage point at its December 8-9 meeting. Earlier in the week, Fed Governor Christopher Waller, an influential voice on monetary policy, seemed to favor a half-percentage-point hike next month, given that October consumer inflation data came in above expectations. Other Fed officials have signaled support for gradual rate hikes for the same reasons as Hammack.
Hammack offered a note of caution on her views: "Those are not promises. Those are not commitments. They're not forward guidance, which is a hot-button topic ... they are a conditional set of expectations of where I think the economy can go," she said. She added that she walks into every meeting with an open mind.