Hammack says Fed needs more tightening, open on pace
The Fed official says inflation pressures are broadening beyond AI spending to other companies and consumers still ready to invest.
Published
Federal Reserve official Hammack said Monday that more interest rate tightening is needed, though she is open to adjusting the pace of increases. She said she does not want to deter growth but may need to ease it back a bit, adding that policy will need to work through reduced demand, whether from capital spending or consumption.
Hammack said inflation pressures are no longer confined to artificial intelligence investment. Other companies are performing well too, she said, and are prepared to invest. She added that her conversations with business contacts sound more like an economy that is thriving than one headed for a slowdown.
The remarks push Hammack further into the hawkish camp she has held since mid-October, broadening her inflation argument from AI-driven capital spending to a wider set of companies and consumers. That is a step beyond the pace-focused case she made earlier Monday.
The shift matters for bond markets. The 10-year Treasury yield had only recently pulled back from a high of 5.24% after Fed officials Jefferson and Williams signaled patience on rates, even as officials Goolsbee and Logan worked on October 2 to reopen the gap. A Fed voice describing broad economic strength rather than slowing growth points toward sustained upward pressure on long-dated yields, cutting against the relief that followed a softer reading on the Fed's preferred inflation gauge.