Hammack Urges Swift Small Rate Moves as Bitcoin Slips in October

Restrictive monetary policy is the right approach to bring inflation back to 2%, according to Cleveland Fed President Beth Hammack. She also supports making small rate changes rapidly instead of delaying and potentially needing a bigger move later.

Rate futures indicate a December rate hike, and the dollar is near an 18-month peak. Bitcoin has slipped in October, a month that is usually one of its strongest.

Hammack Explains Preference for Early, Modest Rate Moves

Hammack, a voting member of the FOMC, spoke at the National Association for Business Economics annual meeting. She said the breadth of current price pressures means it will take time for inflation to reach 2%.

August data highlights the gap. The PCE price index, the Fed’s favored inflation gauge, rose 3.4% annually. Core PCE, excluding food and energy, stood at 3%.

Inflation has remained above target for over five years. Hammack noted that long-term inflation expectations have stayed anchored during that period but warned against taking that for granted.

“With each passing month, persistently elevated inflation raises the risks of an inflationary mindset becoming entrenched in the economy,” Hammack said.

The Fed has already begun tightening. It raised rates in September, the first hike in three years, and meeting minutes signaled another hike without a timeline. Hammack also raised the prospect of hikes in July, linking artificial intelligence demand to price pressures.

Rate Hike Expectations and a Stronger Dollar Test Bitcoin’s Uptober

Traders anticipate the next hike in December. CME FedWatch data shows an 84.7% chance of a move at the December 9 meeting. Most of that probability, 69%, is for a 25 basis point increase. For October 28, traders see a 79.5% likelihood of a hold, up from 51% a month earlier.

Those rate hike expectations have pushed the US Dollar Index to an 18-month high. Higher rates make dollar assets more attractive, potentially drawing money away from riskier markets such as crypto.

Bitcoin trades at $81,661, down 2.56% over the past 24 hours, according to BeInCrypto Markets. That leaves BTC roughly 35% below its all-time high of $126,080, set on October 6, 2025.

CoinGlass data shows BTC is down 1.89% so far in October. The month has historically been one of Bitcoin’s strongest, with only three negative Octobers since 2013: 2014, 2018 and 2025.

October also marks the start of Q4, which has averaged a 71.43% gain since 2013, the best of any quarter. Wednesday’s September CPI data gives traders a fresh read before the Fed meets on October 28.

Futures also assign a 15.7% chance to a larger 50 basis point hike in December. Whether that tail grows or fades could decide if Bitcoin salvages its October.