Fed officials backing rate hikes urge immediate action against inflation

Cleveland Fed President Beth Hammack said the Federal Open Market Committee should act to accelerate inflation’s return to the central bank’s 2% target.

“The longer that high inflation persists, the more challenging and costly it can be to bring it back down,” Hammack said in a statement explaining her dissent.

Minneapolis Fed President Neel Kashkari similarly argued that a series of small rate hikes would be preferable to delaying action and potentially having to take more aggressive steps later.

“A potential series of small policy moves would be better than waiting and eventually concluding that even bolder actions were necessary,” he said.

Hammack and Kashkari joined Dallas Fed President Lorie Logan in voting against the Fed’s decision to maintain its benchmark overnight borrowing rate in a range of 3.5%-3.75%.

The remaining nine voting members supported keeping rates unchanged. The policy rate has remained at its current level throughout 2026 after the Fed delivered three cuts in late 2025.

Inflation has remained above the Fed’s 2% objective for more than five years, with recent price pressures driven partly by higher energy costs linked to the Iran conflict and the effects of US tariffs.

Fed Chair Kevin Warsh, who supported keeping rates unchanged, reiterated the central bank’s commitment to restoring price stability, saying years of above-target inflation could not be reversed within weeks or through a single month of softer price data.

Hammack said she was not confident that inflation would return to the target without further policy action, noting that price pressures were also emerging from the demand side of the economy.

She added that businesses in the Cleveland Fed district reported broadening pricing pressures, while consumers continued to express concern over persistently high prices.

Kashkari said monetary policy could play an important role even when inflation was driven by repeated supply shocks, warning that successive shocks could ultimately lead to persistently higher inflation expectations.