Cleveland Federal Reserve Bank President, Beth Hammack, has cautioned against prematurely easing monetary policy in the United States. In an interview with Handelsblatt, Hammack expressed concern that a rapid and significant reduction in interest rates could be detrimental, particularly given the persistent inflation and potential risks within the labor market that have yet to fully manifest. She emphasized the need for caution as the Federal Reserve gradually unwinds its restrictive monetary stance.
Recent data indicates that the Consumer Price Index (CPI) rose by 2.9% in August compared to the previous year. This remains above the Federal Reserve’s target inflation rate of 2.0%. Hammack highlighted that inflation is proving persistent and expanding beyond goods to encompass services. Furthermore, signals from the labor market suggest potential weakening.
As a voting member of the Federal Open Market Committee (FOMC), the body responsible for setting U.S. monetary policy, Hammack will participate in deliberations on interest rate decisions in the coming year. She described the committee’s discussions as respectful, collaborative and characterized by a broad range of perspectives. Hammack affirmed that the Federal Reserve makes decisions based on incoming data, operating independently and without consideration of political influences.