Beth M. Hammack, President of the Federal Reserve Bank of Cleveland and a voting member of the Federal Open Market Committee (FOMC) in 2026 through a rotating regional president seat, delivered a blunt verdict on the Fed’s record on Thursday. The central bank, she said, has been missing on its inflation mandate for years. Because she votes this year, the call carries weight at the table.

Inflation is moving in the wrong direction, she warned, and recent data show price pressures broadening. Her fix is direct: the Fed needs to move to restrictive monetary policy to bring inflation down, though she wants smaller, steadier rate increases that give the economy time to adjust.

She does not believe the Fed is behind the curve, but if that changes, she would consider more aggressive action. Hammack also flagged where the pressure is coming from. She sees real price pressures from the AI build-out, along with secondary price pressures from energy.

The labor market earned a mixed verdict. The Fed is doing very well on the job side of its mandate, she said, yet she would not call the job market healthy because it is static and lacks dynamism. Financial conditions, she added, are supportive of growth.

Key Quotes:

Inflation

  • Fed has been missing its inflation mandate for years.

  • Inflation is moving in the wrong direction.

  • Recent inflation data has shown broadening price pressures.

  • There are real demand pressures contributing to high inflation.

  • Worries the economy could form an inflationary mindset.

Monetary Policy

  • We need to move to restrictive monetary policy to lower inflation.

  • Smaller, steadier rate increases give the economy time to adjust.

  • Doesn’t believe the Fed is behind the curve; if that happens, would consider more aggressive action.

  • Goes into all FOMC meetings with an open mind.

Labor Market

  • Fed is doing very well on the job side of the mandate.

  • Job market static; would not describe it as healthy due to lack of dynamism.

AI & Productivity

  • Real price pressures coming from AI build-out.

Energy & External Risks

  • Seeing secondary price pressures from energy.

Financial Conditions

  • Financial conditions are ‘supportive’ of growth.

Fed Task Forces

  • Very interested to see what task forces weigh in.