Fed's Hammack backs restrictive rates, favors smaller, more frequent moves

Rates, inflation and the labor market

Speaking in prepared remarks in Zurich, Cleveland Fed President Beth Hammack said, "I expect that monetary policy will need to move to a restrictive stance to bring inflation back to 2% in a timely manner." She added she prefers "more frequent, smaller adjustments when possible," saying, "This strategy would also reduce the risk of having policy fall behind where it needs to be and an inflationary mindset take hold."

She has previously cautioned that repeated supply shocks raise the odds that companies and households adopt an inflation-first mindset, which would complicate hitting the 2% goal. In remarks Thursday, she noted that inflation has stayed over the target for nearly six years, with price pressures appearing broad based and driven by both supply and demand.

Hammack also sees the jobs picture firming.

Dissent, other Fed views and market odds

Hammack was among the two Fed officials who broke with the decision last week, as policymakers opted to leave the benchmark rate unchanged following strong inflation readings. Since then, a number of officials have pushed for tightening at a gradual pace to minimize the impact on financial markets and the broader economy.

Futures pricing points to investors expecting rate hikes in December and again in March. Also on Thursday, Richmond Fed President Tom Barkin restated his backing for a "gradual" tempo of hikes and would not specify how far rates will ultimately have to go.

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Dollar dominance, stablecoins and AI

She also discussed the growth of so-called stablecoins, describing them as digital tokens pegged to a government-issued currency, most commonly US dollars.

While usage is limited now, she said adoption could scale quickly if companies with large customer networks, such as Google or Amazon, were to roll out their own tokens.

Independence, meeting cadence and your money

Hammack delivered her remarks two days after Democrats notched broad victories in the US midterm elections, taking control of both the House and the Senate, a shift that may insulate the Fed from President Donald Trump's efforts to influence interest rate policy.

She and Barkin also played down a prospective calendar change laid out by Chairman Kevin Warsh, who last week outlined plans to move by 2028 to eight meetings per year, making rate decisions at six and using two for broader strategy. Hammack called it "a pretty modest shift."

The bottom line: a restrictive stance, a bias toward smaller but more frequent moves, and futures pointing to potential hikes in December and March all lean toward tighter financial conditions. Rate sensitivity sits front and center for bonds, cash yields, and equity valuations, while payments rails could evolve if stablecoins or AI agents start transacting at scale.

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