Hammack Warns of Multiple Rate Hikes Needed to Tame Inflation

Cleveland Federal Reserve President Beth Hammack believes multiple interest rate hikes will be necessary to combat inflation. Speaking in an interview, she stated that a single 25-basis-point move would not significantly impact the economy, suggesting that more than one increase may be required.

Hammack expressed her concerns about the current federal funds rate of 3.5% to 3.75%, stating it does not meaningfully restrict growth amid stubborn inflation. She warned that the longer the central bank waits to address inflation through higher interest rates, the more difficult it will be to return inflation to the Fed's 2% target.

The Cleveland Fed president also discussed the July jobs report, which showed a loss of 23,000 jobs when economists expected a gain. However, Hammack stated that she is 'still not seeing a problem' with the labor market given the 4.1% unemployment rate near her estimate of full employment.