Cleveland Federal Reserve President Beth Hammack said Friday she would be hesitant about lowering interest rates as long as inflation remains a threat.
In a CNBC interview, the policymaker did not share the market’s enthusiasm for a cut, sparked after Chair Jerome Powell’s keynote speech earlier in the morning stating that current conditions “may warrant” policy easing.
“I heard I heard that the chair is open-minded about what the right stance of policy is going to be and what the right decision is going to be in September,” Hammack said. “We’ve been above our [inflation] target for four years, and we need to get that under control. So to me, we need to maintain a modestly restrictive stance of policy to get inflation back to target.”
Hammack acknowledged that her idea of the “neutral” interest rate that neither boosts nor restricts activity is higher than most other Fed officials. The former Goldman Sachs executive is not a voter this year on the rate-setting Federal Open Market Committee but will be in 2026.
“So I don’t really think we have that far to go, which is why I want to make sure we’re maintaining that restrictive stance of policy to get inflation back to target,” she said. “I don’t want to move us to a place where we’re being accommodative, because I worry that if we’re accommodative, we could reinvigorate the inflationary pressures.”
The Fed has held its benchmark funds rate in a range between 4.25%-4.5% since December 2024. Following Powell’s speech, futures traders priced in a nearly 90% chance that the FOMC would cut in September, according to the CME Group’s FedWatch gauge.
In a separate CNBC interview Thursday, Kansas City Fed President Jeffrey Schmid also expressed skepticism about cutting. Schmid is an FOMC voter this year but won’t be again until 2028.
