Cleveland Federal Reserve President Beth Hammack, a voting member of the Federal Open Market Committee (FOMC) this year, signaled a more forceful hawkish stance, saying one rate hike alone may not be enough to bring inflation under control and that multiple increases may be needed to return inflation to the Fed’s 2% target.
In an interview with Yahoo Finance on Monday, Aug. 10, Hammack said that 「a single 25-basis-point rate hike may have very little effect on the economy」 and that the number of hikes required may be 「more than one」. She also said she did not want to prejudge the exact number of increases that could ultimately be needed.
Current rates are not meaningfully restrictive, Hammack says
Hammack also addressed the current policy setting directly. She said the present level of interest rates is not placing a 「meaningful restriction」 on the economy, and added that she does not believe inflation will fall back to target on its own.
That view shows that, in her assessment, the current degree of policy tightness is still insufficient to effectively contain inflation pressures. The interview was also her first detailed public explanation of her monetary policy stance since her dissent at last month’s Fed meeting.
She voted for a hike at last month’s meeting
Hammack was one of three dissenting officials at the Federal Reserve’s policy meeting last month. She and two other officials voted in favor of a rate increase, opposing the decision to keep rates unchanged.
After that meeting, Hammack said in a statement that the longer high inflation persists, the harder it will be to bring it back to target. Her latest comments show that her concerns about the current policy stance have not faded after the decision to leave rates unchanged.
No specific forecast on how many hikes
When asked about the scale of future tightening, Hammack offered direction rather than a firm numerical forecast. She said the number of hikes needed may be 「more than one」, but declined to put a specific figure on it.
She also stressed that inflation will not return to the 2% goal automatically. On that basis, she argued for a more active rate-hike path to strengthen policy restraint on inflation.