The Cleveland Fed’s Hammack advocates maintaining rates of interest at present “barely restrictive” ranges

Cleveland Federal Reserve President Beth Hammack gave hints Thursday that she believes the central bank may be nearing the end of what could be a short rate-cutting cycle.

The policymaker told CNBC that she considers current interest rate levels to be “hardly restrictive, if at all” in terms of economic impact.

Tightening is a key indicator for Fed officials, who are ideologically divided over whether labor market weakness or inflation pose a greater threat. When it comes to inflation, Hammack is more in the hawkish camp, favoring higher interest rates and more restrictive policies as a bulwark against further price increases.

“I think we need to maintain modest, somewhat restrictive policy to ensure that we continue to bring inflation down to our 2% target,” she told CNBC’s Steve Liesman on “Squawk on the Street.” “Right now, I think monetary policy is hardly, if at all, restrictive and I think we need to make sure that we maintain that somewhat restrictive stance to enforce monetary policy.”

Hammack added that she believes the current key interest rate, targeted in a range between 3.75% and 4%, is “roughly neutral,” suggesting it doesn’t need to be cut much further.

Hammack will be a voting member of the Federal Open Market Committee next year.

The Fed’s next meeting is Dec. 9-10, and market expectations have shifted from the near-certainty that the committee would approve a third straight quarter percentage point cut to now priced in about a 60% chance that the committee will stand firm, according to CME Group’s FedWatch futures price tracker. Minutes from the October meeting released Wednesday detailed the stark divide between committee members.

While focusing on inflation, Hammack expressed concern about current price levels, noting that interviews she and her staff have conducted in the Cleveland area indicate that labor market pressures as well as inflation concerns are causing households to struggle to make ends meet.

“What we are hearing from workers is that they are clinging to their jobs if they have them, at the risk of their lives,” she said. “We’re in this slow environment where there are few employees and few employees are being laid off. But what I also heard was that the money they’re receiving just doesn’t go as far as it used to. What used to cost $30 is now $50, and so… inflationary pressures are still very pronounced for them.”

Referring to the September nonfarm payrolls report released Thursday, Hammack called the picture “mixed,” as it showed both higher-than-expected wage growth and an increase in the unemployment rate.

Correction: Cleveland Federal Reserve President Beth Hammack will be a member of the FOMC next year. An earlier version of this story misstated when she would serve on the rate-setting committee. The story also misstated a number. Hammack had said, “What used to cost $30 is now $50…”