Cleveland Fed President Beth Hammack has stressed that inflation risks are more pressing than labor market weakness, a sign that she supports keeping interest rates high. Speaking at a European Central Bank conference, she stressed that price pressures are still not in line with the Fed’s mandate.
Hammack rejected the idea of another interest rate cut, saying monetary policy must remain tight to ensure inflation returns to its 2% target. Tariffs and services sector inflation are seen as major contributors to rising prices.
She acknowledged that the labor market is showing signs of improvement, with jobs data increasingly fragile. However, the current situation is fundamentally weak hiring and at the same time low layoffs. But this does not provide a strong enough reason to ease monetary policy.
In the medium term, Hammack expects inflation to return to the Fed’s target by 2027. However, she warned that inflation expectations need to remain under control as there are “worrying signs.”
Hammack reiterated his commitment to remain open-minded about economic developments, but stressed the need to maintain a tight monetary stance to cool price pressures and control inflation risks.
