Fed's Hammack: Rates Likely on Hold for Some Time

Federal Reserve Bank of Cleveland President Beth Hammack has indicated that interest rates may remain on hold for an extended period, as the central bank assesses the economic outlook and the potential impact of government policies. In her remarks at the University of Kentucky Gatton School of Business and Economics on February 28, 2025, Hammack emphasized the importance of patience in monetary policy, given the uncertainty surrounding government policies such as trade tariffs.

Hammack's comments come as the Fed grapples with the challenge of lowering inflation while maintaining a healthy job market. Inflation, as measured by the Fed's preferred metric, has remained stubbornly above the central bank's 2% target, despite the Fed's efforts to rein it in. In her speech, Hammack noted that the pace of price increases is "still not all the way back to where we want it to be," and that "it will likely be appropriate to hold the funds rate steady for some time."

The Fed's decision to hold rates steady is influenced by several factors, including the strong economic growth, low unemployment, and elevated inflation that Hammack cited in her remarks. These factors suggest that the current policy stance may not be sufficiently restrictive to bring inflation back down to the Fed's target in the near future. Additionally, Hammack expressed concern about the potential impact of trade tariffs and other government policies on the inflation outlook, noting that the risks appear skewed to the upside.

Hammack's cautious approach to monetary policy reflects the Fed's commitment to maintaining a stable and healthy economy, even in the face of uncertainty. By taking a patient approach to interest rates, the Fed can better assess the economic outlook and respond to changes in the economy as needed. This approach also allows the Fed to monitor the evolving outlook for economic activity, the labor market, and inflation, ensuring that monetary policy remains aligned with the central bank's long-term goals of maximum employment and stable prices.



In conclusion, Federal Reserve Bank of Cleveland President Beth Hammack has indicated that interest rates may remain on hold for an extended period, as the Fed assesses the economic outlook and the potential impact of government policies. Hammack's comments reflect the Fed's commitment to maintaining a stable and healthy economy, even in the face of uncertainty. By taking a patient approach to interest rates, the Fed can better assess the economic outlook and respond to changes in the economy as needed, ensuring that monetary policy remains aligned with the central bank's long-term goals.