Cleveland Fed President Beth Hammack has once again called for a more restrictive interest rate stance, arguing that the current inflation situation remains insufficiently controlled and that demand pressures from the artificial intelligence investment boom are adding further urgency to policy tightening.

Speaking at an event in Columbus, Ohio, on Thursday, Hammack said, "My judgment is that we need to move to a restrictive policy stance to bring inflation back down to our 2% target — that target is essential."

She warned that delayed policy action could trigger self-reinforcing inflation expectations. The latest data showed that October core inflation came in above expectations, and she described the progress on inflation improvement as having "substantially stalled," saying bluntly that inflation is "moving in the wrong direction."

On the rate path, Hammack advocated for steady increases in a "more frequent, smaller" manner rather than aggressive, large-scale moves.

She was one of two dissenting officials at last month's Fed policy meeting, opposing keeping rates unchanged in the 3.75% to 4% range and favoring an additional 25 basis point hike.

Inflation Data Disappointing, Case for Tightening Solid

Hammack noted that recent inflation data trends are concerning.

October core inflation, which excludes food and energy, rose more than expected, indicating that inflation stickiness remains strong. "Inflation has been more persistent than I would like," she said. "The latest data show that inflation is moving away from our 2% target, not toward it."

She also mentioned demand-side pressures from artificial intelligence infrastructure buildout. With the large-scale expansion of data centers, related investment has provided a clear boost to economic activity, and the Fed needs to fully factor in this structural element when assessing inflation trends.

"When I look at this balance, what I see is sticky inflation," Hammack said.

Favoring Gradual Hikes, Not Ruling Out More Aggressive Options

On the pace of rate increases, Hammack differs from some of her colleagues.

She explicitly supports adjusting the policy rate in small, frequent increments, arguing that this is more predictable for businesses and households and less disruptive to the overall economy. "Steady, small adjustments are far less destructive than big, aggressive moves," she said.

However, officials are not unified on the pace of rate hikes. It is reported that Fed Governor Christopher Waller warned this week that the Fed may need to consider a 50 basis point rate hike at the December meeting.

In response, Hammack said that if policy falls behind the curve, more aggressive action cannot be ruled out, but she does not currently believe that situation has arisen. "I don't think we are behind the curve today, but if we were, that might be an option to consider," she said, adding that she will keep an open mind heading into the December meeting.

Dissented at Last Month's Meeting, December Stance in Focus

Hammack cast a dissenting vote at last month's Fed rate decision, making her part of the minority.

At that time, the Fed decided by majority vote to keep the federal funds rate target range at 3.75% to 4%, while Hammack clearly favored an additional 25 basis point hike.

Her latest remarks further clarify her policy stance ahead of the December meeting. As internal Fed discussions on the pace and magnitude of rate hikes continue to heat up, uncertainty surrounding the December policy decision has increased, and market attention to officials' statements has risen accordingly.