The Cleveland Fed's top dissenter says current rates aren't restraining economic growth
Cleveland Federal Reserve President Beth Hammack is calling for immediate interest rate increases, warning that the current federal funds rate of 3.50%–3.75% is doing little to slow business borrowing and investment.
She says that unchecked appetite for growth is compounding an inflation problem that has run above the Fed's 2% target for more than five years.
Speaking at the Dayton Area Chamber of Commerce in Ohio on Wednesday, Hammack drew a direct line between business investment appetite and sustained price pressure.
"When I'm talking to businesses, I hear that businesses are excited to raise funds, they're excited to borrow so they can continue to invest," she said.
"If we have too much of that growth... it could mean that that's putting additional pressure on price increases."
In a separate Yahoo Finance interview Monday, she put it plainly: "When I'm talking to businesses, I'm not hearing that they're sensing any restraint from investments in growth based on where interest rates are. So to me that says that now is the time to act."
One hike won't be enough
Hammack was one of three Federal Reserve officials who dissented at the central bank's July meeting, alongside Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan — marking the first three-member dissent against a Fed majority since 2016.
All three voted for an immediate 25-basis-point increase while the majority held the rate steady for the fifth consecutive time in 2026.
On how many moves might be required, Hammack offered no false comfort.
"I would say in general, one 25-basis-point move probably doesn't do a whole lot for the economy," she told Yahoo Finance.
"So it's probably some number of [movements]. But I don't want to prejudge what that number is going to be."
As veteran broker Melissa Cohn has argued, the September meeting is now the pivotal moment for the Fed to act.
Four consecutive weeks of rising mortgage rates pushed the 30-year fixed to a 12-month high of 6.66% in the wake of the July vote, and fresh CPI and PCE readings due before September will set the tone for what the committee does next.
The 30-year fixed-rate mortgage slipped two basis points to 6.67% for the week ending August 13, according to Freddie Mac's Primary Mortgage Market Survey.https://t.co/v2EpDCj0jj
— Mortgage Professional America Magazine (@MPAMagazineUS) August 13, 2026
Still the wrong side of 2%
The consumer price index (CPI) rose 3.5% through June, while the personal consumption expenditures (PCE) index — the Fed's preferred inflation gauge — came in at 3.7% for the same period.
Hammack acknowledged that recent monthly readings have edged lower, but said two months of improvement are not enough to declare a turn.
"I don't have confidence that we're going to continue to see that or that we're going to see them low enough that it's going to bring us back down to that 2%," she said.
She grounded the policy argument in the daily reality of working Americans — a father who had to skip his son's travel football games because of high gas costs, and workers with stable jobs relying on food banks to manage their budgets.
"I think that we need to act now because I think we need to bring inflation back down to that 2% objective faster than what a longer-term glide path would say with interest rates at this level," she said.
Mike Fratantoni, SVP and chief economist at the Mortgage Bankers Association (MBA), told Mortgage Professional America following the July vote that the committee's direction has become unmistakable.
"The FOMC's decision to hold the federal funds target at its current level, coupled with the three dissents at this meeting, with each of these dissenting members preferring to hike rates now, indicates that the Fed is likely moving into a hiking cycle soon," he said.
Hammack is not waiting for the data to make the case for her. "Nothing would make me feel better than to be wrong," she told Yahoo Finance. "But from where I sit, I just don't see it coming back on its own."
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