Cleveland Fed President Beth Hammack stated that current monetary policy warrants a pause as policymakers assess the economic impact of cumulative 75 basis points in rate cuts during Q1. "Our baseline expectation is maintaining this stance until we see clearer evidence of inflation returning to target or more substantial labor market softening," Hammack remarked during a Thursday-recorded Wall Street Journal podcast aired Sunday.
The Fed's December 10 rate cut decision faced three dissenting votes—the most since 2019—revealing divisions among officials. Some policymakers prioritized labor market cooling concerns, while others emphasized controlling above-target inflation. Post-meeting projections showed six officials favored holding rates steady.
"We've cut 75bps, which should support our employment mandate, but vigilance remains crucial," said Hammack, who'll gain FOMC voting rights in 2026. "I'm intensely focused on restoring inflation to target—a primary objective we must achieve."
Policymakers recently received delayed economic data due to the record government shutdown. While November unemployment rose to 4.6% from September's 4.4%, core CPI (excluding volatile food/energy) rose just 2.6% annually—the smallest increase since 2021. Hammack cautioned against overinterpreting single reports, noting shutdown-induced data "noise."
"It's one data point—I prefer observing trends," she said, noting ample time remains before the next meeting. She highlighted persistent 3% inflation through much of the past 18 months, with rising business input costs potentially reigniting price pressures—justifying continued caution. Post-December cuts, Hammack prefers maintaining "modestly restrictive" rates.
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