Beth Hammark, a hawkish official at the Federal Reserve and president of the Cleveland Fed, recently stated that after the Fed cut interest rates three times in a row, she believes there is no need to adjust U.S. interest rates in the coming months .
Hammark does not have a vote on monetary policy this year, but will become a voting member of the FOMC in 2026.
Hammark opposes the recent rate cuts because she is more concerned about persistently high inflation than about potential labor market fragility, which has prompted the Federal Reserve to cut rates by a total of 75 basis points in the last three meetings.
Hammark stated that the Federal Reserve does not need to adjust its current benchmark interest rate, which is in the 3.5%–3.75% range, at least until next spring .
She pointed out that by then, as the tariff policies introduced by US President Trump have been more fully absorbed into the supply chain, the Federal Reserve will be able to more accurately assess whether recent commodity price inflation is declining.
Hammark argues that the 2.7% Consumer Price Index (CPI) in November likely underestimated the rate of price increases due to data distortion .
“My baseline expectation is that we can maintain current interest rates for some time until we get clearer signals—whether it’s inflation falling back to target or a more pronounced weakening in the labor market,” Harmark emphasized her concerns about inflation in a podcast interview recorded last Thursday.
Earlier this month, Hammark said at an event in Cincinnati that she preferred to keep interest rates at a slightly more restrictive level in order to continue to put downward pressure on inflation.
Last Friday, Williams , the third-ranking official at the Federal Reserve and president of the New York Fed, This also signaled a pause in interest rate cuts. He stated that given recent employment and inflation data, there is no urgency to cut rates again, "because our previous rate cuts have already put us in a very favorable position."
The Federal Reserve cut interest rates for the third consecutive time on December 10, but an unusual "internal division" emerged. Chicago Fed President Goolsby and Kansas City Fed President Schmid officially voted against it, advocating for keeping rates unchanged; six other policymakers hinted in the dot plot that they also did not support further rate cuts.
According to CME's FedWatch Tool, the probability of the Federal Reserve cutting interest rates by 25 basis points in January is currently 21%, while the probability of keeping rates unchanged is 79%. By March of next year, the probability of a cumulative 25 basis point rate cut is 47.1%, the probability of keeping rates unchanged is 43.4%, and the probability of a cumulative 50 basis point rate cut is 9.5%.
(Article source: CLS)
