Fed’s Hammack Says She Prefers Slightly More Restrictive Rates
James WhitmanFederal Reserve Bank of Cleveland President Beth Hammack said she would prefer interest rates to be slightly more restrictive to keep putting pressure on inflation, which is still running too high.
Federal Reserve Bank of Cleveland President Beth Hammack said she would prefer interest rates to be slightly more restrictive to keep putting pressure on inflation, which is still running too high.
"Right now, we've got policy that's right around neutral," Hammack said Friday during an event in Cincinnati. "I would prefer to be on a slightly more restrictive stance to help continue to put pressure" on the inflation side of the central bank's mandate, she said.
Fed officials delivered a third consecutive rate reduction earlier this week, but a large group of regional bank presidents signaled they opposed the cut. Two officials, Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeff Schmid, officially dissented against the move, saying they preferred to leave rates unchanged. And six policymakers penciled in rate projections suggesting they also opposed a cut.
Hammack didn't vote on monetary policy decisions this year but will vote in 2026. Asked if she supported this week's rate reduction, she didn't directly answer the question but said it was a "complicated decision" since officials are facing pressure on both sides of their mandate.
The Cleveland Fed chief cautioned last month that lower interest rates could prolong the period of above-target inflation. She has previously said that she opposed the rate cut in October and saw little reason for a reduction in December.
Hammack said she is grateful policymakers will receive key data on prices and employment in the coming weeks that should help them understand the trends in the economy — after their publication was delayed by a federal government shutdown. She also said the Fed doesn't have the appropriate tools to address structural changes in the economy.
Inflation has been running above the Fed's 2% target for several years, and has recently been stuck closer to 3%, Hammack said.
