Fed’s Hammack: Higher Rates May Be Needed as Inflation Psychology Builds

Hammack's framing matters less for the rate path itself than for the reasoning behind it: she is flagging inflation psychology, not current price data, as the risk. That shifts the debate toward expectations, where policy can tighten even as headline inflation cools. For risk assets, including crypto and tokenized RWA markets, the sensitivity runs through the discount rate and dollar liquidity rather than any direct regulatory channel. Whether other Fed officials echo the expectations concern, or treat it as a minority view, is the open question.