Fed’s Beth Hammack Opposes Rate Cuts, Emphasizes Inflation Control
Highlights:
- Cleveland Fed President Beth Hammack dissented on the recent Fed rate cut, advocating for holding rates steady.
- She stresses the importance of prioritizing inflation control and keeping rates restrictive until clear progress is observed.
- Hammack considers current rates to be near neutral, neither stimulating nor restraining economic activity.
At this week’s Federal Reserve meeting, Cleveland Fed President Beth Hammack voiced her dissent against further rate cuts, arguing that interest rates should remain steady until significant progress is made in reducing inflation. She believes rates are close to neutral but should stay restrictive enough to modestly constrain economic activity for an extended period.
Hammack’s Stance on Inflation and Monetary Policy: Beth Hammack, the sole dissenter at this week’s Fed meeting, emphasized the need to focus on inflation, suggesting that the economy’s strength justifies a more cautious approach to monetary easing. She stated:
“Given my assessment that monetary policy is nearing a neutral stance, I prefer to maintain the current policy until further evidence shows inflation moving toward our 2% target.”
Hammack’s dissent follows Fed Governor Michelle Bowman’s earlier support for the recent 25 basis point cut. Hammack views inflation’s persistence as a key reason to keep rates elevated and noted that monetary policy must remain modestly restrictive.
Fed Lowers 2025 Rate Cut Projections Amid Inflation Concerns: Fed officials have revised their 2025 outlook, reducing the number of projected rate cuts from four to two, citing persistent inflation. While November’s inflation data showed a slight monthly decline, prices remain elevated, and the Fed is focused on achieving its 2% target.
- Core PCE Inflation: Excluding food and energy, core PCE rose 0.1% month-over-month in November, compared to 0.3% in October. Annually, core prices increased 2.8%, slightly below Wall Street’s expectation of 2.9%.
- Overall Inflation: Overall PCE inflation was 2.4% year-over-year, slightly below economists’ forecasts of 2.5%.
Hammack highlighted that while inflation has decreased from its 7.2% peak in mid-2022, it remains elevated, requiring sustained focus. With a robust job market providing economic resilience, the Fed is committed to bringing inflation down to its target of 2%.
