Fed’s Hammack signals holding rates steady for months: report

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Federal Reserve Bank of Cleveland President Beth Hammack has expressed her stance on US interest rates, stating that she believes there is no need to change them in the coming months. This comes after the central bank has cut borrowing costs at its last three meetings, as reported by the Wall Street Journal on Sunday.

Contrary to recent rate cuts, Hammack is more concerned about elevated inflation than potential labor-market fragility, which prompted officials to lower rates by a total of 75 basis points over the past few months, as per the report.

Hammack emphasized that the Fed should maintain its current benchmark interest rate, which is currently in a range between 3.5% and 3.75%, at least until the spring.

Federal Reserve Bank of Cleveland President Beth Hammack said the central bank does not have to cut interest rates in the coming months. REUTERS

According to Hammack, by the spring, the Fed will be in a better position to evaluate whether recent goods price inflation is receding, particularly as President Trump’s tariffs are fully integrated into the supply chain, as per the report.

The report also mentioned that Hammack believes the consumer price index of 2.7% in November likely understates 12-month price growth due to data distortions.

During a podcast interview with the Journal last Thursday, Hammack stated, “My base case is that we can stay here for some period of time, until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially,” citing her concerns about inflation.