Cleveland Fed’s Hammack Signals Extended Rate Pause Amid Inflation, Economic Stability

Cleveland Federal Reserve President Beth Hammack signaled that she sees little justification for immediate interest rate cuts, emphasizing patience and a prolonged pause in rate adjustments amid a still resilient U.S. economy. She described the current policy stance as only modestly restrictive and noted that inflation remains above the Fed's 2% target, with recent data suggesting PCE inflation increased to 2.3% in May. Hammack emphasized the importance of holding rates steady until clear signs of economic weakening appear, preferring cautious, measured moves over premature easing. While she acknowledged the possibility of rate cuts if the economy falters and inflation declines, she remains attentive to evolving conditions, including risks from rising oil prices and tariff impacts. Her views align with Federal Reserve Chairman Jerome Powell’s recent comments, signaling patience rather than hastened cuts. Hammack highlighted that any policy changes would balance risks from inflation and labor market dynamics, with the possibility that rates might move in either direction depending on future data.