Fed’s Hammack is inflation-wary and prefers holding rates steady into the spring
The Cleveland Fed president, who will vote on rates in 2026, said she is taking November’s cooler inflation reading “with a grain of salt.”
Cleveland Fed President Beth Hammack said she doesn’t see any need to change interest rates for several months after the central bank cut rates at its last three meetings.
Hammack has opposed recent rate cuts because she is more worried about elevated inflation than the potential labor-market fragility that prompted officials to lower rates by a cumulative 0.75-point over the past several months. Hammack wasn’t a voting member on the rate-setting committee this year but will become a voter next year.
“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," she said in an interview Thursday with The Wall Street Journal’s “Take On the Week" podcast.
Hammack said a favorable inflation reading for November released last week likely understated 12-month price growth due to data-collection distortions created by the government shutdown in October and the first half of November.
While the Bureau of Labor Statistics reported that the consumer-price index was up 2.7% from a year earlier in November, estimates that adjusted for the data-measurement difficulties “puts it closer" to the 2.9% or 3.0% figure that forecasters had broadly anticipated, she said.
“While it’s great to get this official BLS data back, I do take it with a grain of salt," she said.
Hammack’s concern about lowering interest rates centers on her view that the so-called neutral level—which neither spurs nor slows the economy—is higher than widely believed and that the economy is primed for solid growth next year. The neutral rate can’t be directly observed, though it can be inferred from how the economy is faring.
“It feels to me like we’re maybe a little bit below" her estimate of the neutral rate, meaning the Fed’s policy could be, on net, providing stimulus, she said.
Hammack suggested the Fed didn’t need to change its benchmark interest rate, currently in a range between 3.5% and 3.75%, at least until spring. By then, she said, it would be able to better assess whether recent goods-price inflation was receding as tariffs are more fully digested through the supply chain.
The former Goldman Sachs executive said she is hearing from business leaders that higher input costs, including those due to tariffs, could lead them to make larger price increases in the first quarter. That is concerning, she said, given how inflation has been “stuck around this close-to-3% level for the better part of…18 months."
Write to Nick Timiraos at Nick.Timiraos@wsj.com
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