Fed's Hammack Repeats Call for Small Rate Increases to Curb Inflation

By Dean Seal

Cleveland Fed President Beth Hammack, one of the two officials who voted to raise rates last week, said policy still needs to tighten for the central bank to successfully rein in inflation.

Hammack on Thursday reiterated her call from last month for the central bank to make smaller, more frequent rate adjustments rather than big one-time changes as it becomes more restrictive.

Doing so would be less disruptive to households, businesses and financial markets, Hammack said in remarks at a conference in Zurich. "This strategy would also reduce the risk of having policy fall behind where it needs to be and an inflationary mindset take hold," she said.

Hammack is one of two voting members of the Fed's rate-setting committee who, alongside Fed governor Lisa Cook, dissented last week from the committee's decision to hold rates steady. Cook and Hammack said they favored a quarter-point increase.

Weeks ahead of her dissent, Hammack said at the National Association of Business Economics' annual meeting that she would prefer to make small, quick policy adjustments rather than wait and risk a bigger course change later on. Letting inflation remain elevated could lead to an inflationary mindset becoming entrenched in the economy, she said.

The Fed's rate-hold in October came less than a week before the midterm elections. The Fed is expected to raise rates in December, with the odds for such an increase currently sitting at 83%, according to CME's FedWatch tool.

Write to Dean Seal at dean.seal@wsj.com