Persistently Elevated Inflation Would Warrant Raising Interest Rates, Fed's Hammack Says

03:44 PM EDT, 06/02/2026 (MT Newswires) -- The Federal Reserve may need to raise interest rates should inflationary pressures persist, Cleveland Fed President Beth Hammack said Tuesday.

Annual inflation, as measured by the personal consumption expenditures price index, hit 3.8% in April, the highest reading in almost three years even as consumer spending moderated in the face of high gasoline prices, Bureau of Economic Analysis data showed late last month.

Hammack said consumers expect prices to keep going up.

"I'm more concerned about the growing risks of persistently elevated inflation than the risks to full employment and also that monetary policy may not be sufficiently restrictive to bring inflation down to 2%," Hammack said in prepared remarks for an event in Ohio.

Markets widely expect the Fed to keep its benchmark lending rate unchanged later this month, which would mark its fourth straight pause, according to the CME FedWatch tool. Consumer inflation is expected to reach 6% year on year in the ongoing quarter, a poll of economists by the Philadelphia Fed showed last month.

"If we wait for definitive evidence that high inflation has become embedded in the economy, it may require larger policy adjustments, at greater cost," Hammack said.

Hammack was one of the three Federal Open Market Committee voters that supported its April policy decision, but opposed including an easing bias in the statement.

A "decisive action" may be needed if inflation expectations continue to rise, Hammack said Tuesday.

"For today, it's reasonable to keep rates steady given the uncertainties around the economic outlook," Hammack said. "If inflation persists at an elevated rate, then more restrictive monetary policy could well be needed to bring inflation back to 2% in a timely fashion."

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