Fed's Hammack repeats call for higher interest rates
Cleveland Fed President Beth Hammack's remarks add to a run of hawkish Fed signals that has kept long-dated Treasury yields elevated.
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Chart: US10Y, US 10-year Treasury yield, one-minute prices, three sessions
UpdateMonday, October 12, 2026 at 1:56 PM ET
Hammack says the Fed now faces a question of pace rather than direction, with policy needed to cool the economy "at the margins." She says business contacts describe conditions as strong to booming, but that low-income households have shifted from trading down to cheaper goods to deciding which bills to pay. That places her with Goolsbee, Logan and Musalem in pushing for more restriction, against Jefferson and Williams, who favor patience. Musalem has said a timely return to 2% inflation is the Fed's key goal. Long-dated Treasury yields touched a high near 5.24% around October 1 before pulling back.
UpdateMonday, October 12, 2026 at 1:35 PM ET
Hammack said the question facing the Federal Reserve now is not whether to raise rates further but how fast to make policy more restrictive.
UpdateMonday, October 12, 2026 at 1:01 PM ET
Fed Vice Chair Alberto Musalem has added to the hawkish chorus, saying a timely return to 2% inflation is essential and that strong demand for capital from AI investment and government borrowing is likely to keep interest rates higher than in the past. The 30-year mortgage rate has climbed for a seventh straight week, reaching 7.4% as of October 8. Separately, the White House has formed a committee to investigate Fed Governor Lisa Cook, and Treasury Secretary Scott Bessent has hired Judy Shelton, whose Fed board nomination had stalled under President Trump, as an adviser.
Federal Reserve Bank of Cleveland President Beth Hammack said interest rates need to be higher.
The comments extend an argument she has been building since September, when she warned of an inflationary mindset and above-target inflation, and repeated earlier today in calling for smaller, more frequent rate moves alongside a report of booming business conditions.
Her stance lines up with Fed Governor Christopher Waller, who has said more hikes are needed but not necessarily back to back, and comes after minutes from the September meeting showed unanimous support for that month's hike, with most officials expecting another by year-end.
If the hawkish camp on the committee prevails over those urging patience, longer-dated Treasury yields and mortgage rates face renewed upward pressure rather than the relief markets had briefly priced.