Cleveland Fed President Wants Small, Quick Rate Moves. What It Means for Bitcoin

Cleveland Fed President Beth Hammack said that restrictive monetary policy is appropriate to return inflation to 2%. She also favors making smaller rate adjustments quickly rather than waiting and risking a larger correction later.

Rate futures now point to a hike in December, and the US dollar sits near an 18-month high. Meanwhile, Bitcoin (BTC) has slipped in October, historically one of its strongest months.

Why Hammack Wants the Fed to Move Early and in Small Steps

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

August data shows the size of that gap. The personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 3.4% annually. Core PCE, which excludes food and energy, came in at 3%.

Inflation has now run above target for more than five years. Hammack said long-run inflation expectations have stayed anchored through that stretch, but she 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 started tightening. It raised rates in September for the first time in 3 years, and minutes from that meeting signaled another hike without a timeline. Hammack also raised the prospect of hikes in July, linking artificial intelligence (AI) demand to price pressure.

Follow us on X to get the latest news as it happens

Rate Bets and a Stronger Dollar Test Bitcoin’s Uptober

Traders expect that next hike to come in December. CME FedWatch data shows an 84.7% chance of a move at the December 9 meeting. 

Most of that probability, 69%, sits on a 25 basis point hike. For October 28, traders see a 79.5% chance of a hold, up from 51% a month earlier.

Those hike bets have lifted the US Dollar Index (DXY) to an 18-month high. Higher rates make dollar assets more attractive, which can draw 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 about 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 3 red Octobers since 2013: 2014, 2018 and 2025. 

October also opens Q4, which has averaged a 71.43% gain since 2013, the highest of any quarter. Wednesday’s September Consumer Price Index (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.

Subscribe to our YouTube channel to watch leaders and journalists provide expert insights