Cleveland Fed President Beth Hammack favors smaller, frequent interest rate adjustments

Cleveland Fed President Beth Hammack has suggested that the Federal Reserve may prefer smaller, more frequent interest rate adjustments to help stabilize inflation expectations. Speaking at an annual meeting of the National Association for Business Economics, Hammack noted that making quick, incremental changes is generally preferable to waiting and potentially needing a larger course correction later.

Hammack indicated that a restrictive monetary policy might be necessary to ensure a timely return to the 2% inflation target. She highlighted that inflationary pressures are not solely driven by energy prices but also by high customs tariffs and increased demand for electricity and technology components due to the development of artificial intelligence infrastructure.

While Hammack did not signal support for an interest rate hike in October, she emphasized the importance of monitoring upcoming economic data, including consumer price indices, ahead of the Federal Reserve's late October meeting.