FOMC May Need to Tighten Monetary Policy Gradually to Combat Inflation, Cleveland Fed's Hammack Says

01:15 PM EST, 11/05/2026 (MT Newswires) -- The Federal Reserve may need to continue raising interest rates to curb inflation, though at a gradual pace to minimize economic disruptions, Cleveland Fed President Beth Hammack said Thursday. Last month, the central bank's Federal Open Market Committee held its benchmark lending rate steady, following a 25-basis-point hike in September. Hammack and Fed Governor Lisa Cook preferred a second consecutive quarter-percentage-point hike at the October meeting. Inflationary pressures have intensified this year and appear relatively broad-based, Hammack said Thursday in remarks prepared for delivery at an event in Switzerland, citing September data. "Inflation has now been above our (2%) goal for nearly six years," she said. The headline personal consumption expenditure price index rose 3.6% year over year in September, following a 3.4% gain the prior month. The core measure -- which excludes the volatile food and energy components -- increased to 3.1% from 3%, official data showed last month. "I expect that monetary policy will need to move to a restrictive stance to bring inflation back to 2% in a timely manner," Hammack said Thursday. "I prefer getting to that stance through more frequent smaller adjustments when possible, something which would be less disruptive to households, businesses, and financial markets." Gradual rate hikes should minimize the risk of the policy falling behind where it needs to be and an inflationary mindset becoming entrenched, Hammack said, without specifying when the Fed might resume policy tightening. The FOMC's Summary of Economic Projections released in September indicated that policymakers were anticipating another rate hike by the end of this year. Markets are pricing in a 69% probability that the Fed will raise interest rate by 25 basis points in December, with the remaining odds in favor of a pause, according to the CME FedWatch tool. Last week, St. Louis Fed President Alberto Musalem said the FOMC will likely need to tighten monetary policy "soon" to bring inflation down to its 2% goal in a timely manner.