Fed Official Says Interest Rate Hike Possible

Got story updates? Submit your updates here. ›

Beth Hammack, president of the Federal Reserve Bank of Cleveland, said in an interview that the central bank may need to raise interest rates if inflation remains above the Fed's 2% target, even as some policymakers have signaled a preference for keeping rates unchanged for now. Hammack cited scenarios where the Fed might need to cut rates if the economy slows and unemployment rises, or raise them if inflation stays elevated.

Why it matters

The comments from Hammack, a top Fed official, suggest growing concern among some policymakers that persistently high inflation could require interest rate hikes, a sharp shift from late last year when the Fed cut rates three times. This comes as President Trump has criticized the Fed for not cutting rates further.

The details

Hammack said her general preference is for the Fed to keep its benchmark interest rate unchanged for a while, but 'I can foresee scenarios where we would need to reduce rates ... if the labor market deteriorates significantly,' or 'we might need to raise rates if inflation stays persistently above our target.' The Fed might have to cut its rate if higher gas prices caused the economy to slow and unemployment to rise, she said, but if inflation remained elevated, a rate hike could be needed. Hammack's comments suggest a growing concern among at least some policymakers that inflation, which was elevated before the Iran war, may require rate hikes to counter it.

• Gas prices averaged $4.12 a gallon nationwide on Monday, April 7, 2026, up 80 cents from a month earlier.
• Hammack said the Cleveland Fed's estimates show inflation could reach 3.5% in April 2026, the highest point since 2024.

What they’re saying

What’s next

The Federal Reserve's rate-setting committee will meet in late April to discuss monetary policy, and the outcome of that meeting could provide more clarity on the central bank's plans for interest rates.