Cleveland Fed’s Hammack Warns Persistent Inflation Could Make Price Stability Costlier
Beth M. Hammack said inflation had remained elevated for six years and warned that larger policy adjustments could be needed if expectations become embedded.
Federal Reserve Bank of Cleveland President Beth M. Hammack warned that six years of elevated inflation could entrench higher expectations, making it more costly to restore price stability at the Federal Reserve’s 2% target.
“Preventing an inflationary mindset is critical to delivering on our 2 percent objective,” Hammack said. “Increases in inflation expectations that threaten our goal warrant taking decisive action.”
Hammack said consumers, businesses and financial markets could begin to expect higher future inflation if above-target price growth persists. Those expectations can influence wage demands, pricing decisions and other economic choices that make inflation more difficult to reduce.
She questioned whether monetary policy was restrictive enough to return inflation to 2% and said she was more concerned about persistently elevated inflation than risks to full employment.
“If we wait for definitive evidence that high inflation has become embedded in the economy, it may require larger policy adjustments, at greater cost,” Hammack said.
The Federal Open Market Committee raised the federal funds target range by 25 basis points to 3.75%–4% on Sept. 16. The decision was unanimous, with all 12 voting members supporting the move. The committee said inflation remained elevated and that the action would support a timelier return to its 2% objective.
Hammack’s position follows her dissent from language in the April 28–29 FOMC statement that indicated an easing bias. She supported holding rates steady at that meeting, citing broad-based inflation pressures and rising oil prices.
“FOMC communications anchor inflation expectations, and these expectations affect the decisions that shape actual inflation outcomes—what you think will happen to prices matters,” Hammack said.
The Cleveland Fed’s 2026 Inflation: Drivers and Dynamics conference is scheduled for Sept. 24–25. Hammack is listed for an opening session on Sept. 24 and a policy panel on Sept. 25, with times listed in Eastern Daylight Time.
