03:37 PM EST, 11/20/2025 (MT Newswires) -- Monetary policy easing by the Federal Reserve to support a weakening labor market risks prolonging the period of already-high inflation, Cleveland Fed President Beth Hammack said Thursday.

In remarks prepared for delivery at a Cleveland Fed conference, Hammack said that high inflation and a "softening" jobs market pose challenges for the central bank and the economy, as well as for financial stability. Inflation has been running above the Fed's 2% goal for 4.5 years, she added.

"Lowering interest rates to support the labor market risks prolonging this period of elevated inflation, and it could also encourage risk-taking in financial markets," she said. Hammack is an alternate member of the Federal Open Market Committee this year, which means she gets to vote at a meeting if a scheduled voter is not available.

Official data showed Thursday that the US economy added 119,000 nonfarm jobs in September, more than the 51,000 increase expected in a survey compiled by Bloomberg, though the unemployment rate reached 4.4%, the highest since October 2021. The report, which comes less than a month before the Fed's next monetary policy meeting, was delayed by nearly seven weeks due to the record-long federal government shutdown, which ended last week.

The probability that policymakers will cut rates by 25 basis points next month rose to 40% Thursday from 30% Wednesday, according to the CME FedWatch tool. The odds of monetary policy remaining unchanged fell to 60% from 70%.

With financial conditions now "quite accommodative," policy easing may encourage risky lending, boost valuations further, and delay discovery of weak lending practices in credit markets, Hammack said.

"This means that whenever the next downturn comes, it could be larger than it otherwise would have been, with a larger impact on the economy," she said "At that point, policy would have less space to further reduce rates and offset weak demand."

Separately, Hammack suggested the Fed's rate-cutting cycle could be coming to an end, CNBC reported.

"I think that we need to maintain a modestly, somewhat restrictive stance of policy to make sure that we are continuing to bring inflation back down to our 2% objective," Hammack said in an interview on CNBC's "Squawk on the Street." "Right now, to me, monetary policy is barely restrictive, if at all, and I think we need to make sure that we're maintaining that somewhat restrictive stance to bring monetary to bring in place."

Meanwhile, Fed Governor Michael Barr said policymakers "need to be careful and cautious now" about interest rates, with inflation still running a full percentage point above the FOMC's 2% objective, Bloomberg News reported Thursday.

On Wednesday, minutes of the Fed's October meeting showed that monetary policymakers offered "strongly differing views" regarding the FOMC's interest rate decision for December, underscoring a growing divide among policymakers. At that meeting, the FOMC delivered a second straight 25-basis-point rate cut amid continued concerns regarding the labor market.