Beth Hammack, President of the Federal Reserve Bank of Cleveland, stated on the 12th (local time) that making "small and frequent adjustments" to interest rates rather than large adjustments all at once helps prevent the entrenchment of inflation psychology.

Speaking at the National Association for Business Economics (NABE) annual meeting in Cleveland, Ohio, Hammack diagnosed that "upward price pressures are appearing relatively broadly rather than being concentrated in specific sectors."

She stated, "I believe it is preferable to make relatively prompt, small adjustments when possible, rather than delaying policy adjustments and running the risk of needing a larger course correction later."

Hammack expressed concern that inflationary pressures are emerging in sectors beyond energy prices as well.

She noted, "While rising oil, gasoline, and diesel prices have drawn attention this year, that is not the whole story," adding that businesses in her district plan to raise selling prices by more than their cost increases.

In particular, she pointed out that surging demand from the expansion of artificial intelligence (AI) infrastructure is driving up prices for computers, electronics, and high-tech components, thereby increasing cost burdens not only for data centers but also in the aviation, power generation, and construction sectors.

Hammack explained that the underlying inflation rate in the U.S. estimated by Cleveland Fed researchers is currently in the mid-to-upper 2% range.

Hammack emphasized, "Even with appropriate monetary policy, it will take time for the inflation rate to return to 2%," adding, "A restrictive monetary policy stance is appropriate to bring inflation back to 2% in a timely manner."

However, she did not clarify whether she would support an additional rate hike at the upcoming Federal Open Market Committee (FOMC) meeting of the U.S. Federal Reserve scheduled for October 27–28.

The market expects the Fed to freeze the benchmark interest rate at its current 3.75–4.00%.

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