Cleveland Fed President Beth Hammack struck a notably hawkish tone overnight, warning that monetary policy remains only “barely restrictive” after last week’s rate cut. She remains concerned about high inflation and believes policy should continue “leaning against it.” She reiterated her opposition to the Fed’s decision to lower the federal funds rate by 25bps to 3.75%–4.00%.
Hammack said policy should stay “mildly restrictive” to ensure inflation returns to the 2% objective in a “timely fashion” while minimizing risks to employment. She forecast inflation to end the year near 3%, remaining elevated through 2026 before gradually easing back toward target.
On the labor front, Hammack said she does not assign high odds to a downturn, though subdued hiring may point to “more fragility”.
