Cleveland Fed's Hammack Warns Rate Hikes May Resume If Inflation Trends Continue

Cleveland Federal Reserve President Beth Hammack warned on June 2, 2026, that interest rate increases could soon be warranted if recent inflation dynamics persist, citing risks that elevated price pressures become embedded in the economy. Hammack, speaking in Cleveland, said maintaining steady rates is reasonable given current uncertainties but stressed that "if recent trends continue, it may soon be appropriate to act." She expressed greater concern about entrenched inflation than about the labor market, noting that monetary policy may not be sufficiently restrictive to return inflation to the central bank's 2% target. The official highlighted that business investment plans remain robust, suggesting policy is not holding back activity. With inflation staying elevated, the real federal funds rate has declined in recent months, she said. Hammack pointed to broad-based price increases across goods and nonhousing services, warning that prolonged above-target inflation risks feeding into expectations, wages, and pricing behavior. "If we wait for definitive evidence that high inflation has become embedded ... it may require larger policy adjustments, at greater cost," she said.