Economy June 30, 2026 12:27 PM

Fed’s Hammack Says Higher Rates Remain an Option if Inflation Persists

Cleveland Fed president stresses an open mind at upcoming FOMC meetings and outlines her reaction function as inflation stays elevated

By Jordan Park
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Federal Reserve Bank of Cleveland President Beth Hammack said on June 30 that she could support additional interest-rate increases if elevated inflation does not ease. Speaking on CNBC, Hammack emphasized that inflation has been too high for five years and said she remains open-minded heading into each Federal Open Market Committee meeting. The comments come after the Fed left its target range unchanged and under a new chair who has eschewed forward guidance.

Fed’s Hammack Says Higher Rates Remain an Option if Inflation Persists
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Key Points

  • Hammack said she could support higher interest rates if inflation does not moderate; inflation has been "too high" for five years - impacts monetary policy, bond markets, and financials.
  • She is a voting member of the FOMC this year and keeps an open mind going into each meeting, stressing a data-dependent approach - affects rate expectations across fixed income and banking sectors.
  • The Fed left the federal funds target range at 3.5% to 3.75%; forecasts suggest officials see possible hikes later in the year, while new Chair Kevin Warsh removed forward guidance to encourage market reaction to incoming data - relevant to equity valuations and interest-rate-sensitive industries.

Federal Reserve Bank of Cleveland President Beth Hammack said on June 30 that she may press for higher interest rates if inflation pressures fail to moderate. In a television interview on CNBC, Hammack described current price gains as persistently above desired levels.

"We’ve got inflation that’s too high and it’s been too high for the past five years," Hammack said, adding: "When I look at policy, if that continues, it may mean that we need higher interest rates to bring inflation back down to target."

Hammack is a voting member of the Federal Open Market Committee this year. She declined to identify a specific data trigger or timing for when she would support a rate increase, saying she maintains a flexible stance as policy decisions approach.

"I keep an open mind walking into every meeting. I think every meeting is a live meeting, and it’s important to look at the data and see where that’s taking us," Hammack said.

While she stopped short of offering precise guidance on the future path of interest rates, Hammack underscored the value of communicating her own "reaction function" so the public can better frame expectations about monetary policy.

These remarks were Hammack’s first public comments since the FOMC gathering earlier this month. That meeting - the first held under new Fed Chairman Kevin Warsh - left the central bank’s target federal funds rate range unchanged at 3.5% to 3.75%.

Projections released by the Fed alongside the policy decision indicated officials foresee additional rate hikes this year, even as the policy statement itself omitted conventional forward guidance. Warsh explained the rationale for removing such guidance at his press conference following the meeting, emphasizing the role of incoming data in market pricing.

"Financial markets perform best when they react to incoming data," Warsh said. "The financial markets work less efficiently when they ask a question: How will the Federal Reserve react to that incoming information?"

Other Fed officials have also commented publicly in recent days. New York Fed President John Williams said last Thursday that inflation remains too high and that the current stance of monetary policy is appropriate to bring inflation back to the 2% target, indicating he does not see an immediate reason to move rates up or down.

On the domestic economy, Hammack characterized conditions as broadly healthy. She said the labor market is consistent with full employment and noted that households have been absorbing a recent rise in gas prices linked to the Middle East conflict without widespread strain to date.

"I’m not seeing a lot of restraint in the economy, I’m not hearing from these businesses that interest rates or credit spreads are a reason why they’re holding back from investment and growth," Hammack said.

Hammack reiterated that she is not committing to a fixed policy path, but wants market participants and the public to understand how she would respond to a range of economic outcomes. Her comments add to a string of public statements from Fed officials that highlight a data-dependent approach to monetary policy while acknowledging persistent inflation concerns.


Context and implications

  • The Fed left the target rate range unchanged at 3.5% to 3.75% at its most recent meeting.
  • Projections by Fed officials indicate the possibility of rate hikes later in the year, even though the official statement removed forward guidance.
  • Fed leadership under Chairman Kevin Warsh has emphasized letting markets respond to incoming data rather than providing explicit forward guidance.

Risks

  • Persistently elevated inflation could prompt additional rate increases, which may raise borrowing costs for businesses and households - risk to consumer credit and corporate investment.
  • The lack of forward guidance may increase short-term market volatility as investors adjust to a data-dependent policy regime - risk to bond and equity market pricing.
  • Gas price pressures related to the Middle East conflict could still weigh on household budgets; although households have so far been coping, a sustained rise could reduce consumer spending - risk to consumer discretionary sectors.

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