Fed’s Hammack signals holding rates steady for months
FEDERAL Reserve Bank of Cleveland president Beth Hammack said she saw no need to change US interest rates for months ahead after the central bank cut borrowing costs at its last three meetings, The Wall Street Journal reported on Sunday (Dec 21).
Hammack opposed recent rate cuts as she is more worried about elevated inflation than the potential labour-market fragility that prompted officials to lower rates by a cumulative 75 basis points over the past few months, the report added.
Hammack said that the Fed didn’t need to change its benchmark interest rate, currently in a range between 3.5 and 3.75 per cent, at least until the spring.
By then, she said, it would be able to better assess whether recent goods price inflation was receding as US President Donald Trump’s tariffs are more fully digested through the supply chain, the report said.
Hammack said that November’s consumer price index of 2.7 per cent probably understated 12-month price growth due to data distortions, the report added.
“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,” Hammack said in a podcast interview recorded on Thursday, citing inflation concerns.
Speaking at an event in Cincinnati earlier this month, Hammack said she wanted to focus on high inflation and that she would prefer monetary policy to be tighter.
Hammack said the current policy rate was right, around a neutral level, but would prefer a slightly more restrictive stance to help put more pressure on inflation.
She will be a voting member of the Federal Open Market Committee next year, which oversees important decisions regarding monetary policy and interest rates. REUTERS
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