Cleveland Fed President Beth Hammack said Wednesday that the central bank is considering threats to both inflation and employment and should keep interest rates on hold as the situation evolves.
In a live interview on CNBC, the central bank official advocated for a patient approach to monetary policy as officials watch upcoming data for clues about where the U.S. economy is headed.
“My baseline is that we’re going to keep rates on hold for a while, but I think there are risks on both sides of interest rates,” Hammack said during the Squawk Box debate. “Depending on how the data emerges, I think there is a risk that a more accommodative or more restrictive response may be needed. But that’s why now is a good time to be patient and see how the data flows.”
Mr. Hammack has been a voting participant at Federal Open Market Committee meetings this year.
After making three cuts in late 2025, the commission is keeping both decisions on hold this year. The benchmark federal funds rate is currently targeted at a range of 3.5% to 3.75%, which Hammack said is “the right place” for monetary policy.
But he remains wary of an inflationary shock, as the Iran war and tariffs put pressure on prices.
“All these successive supply shocks make it difficult to think about how to deal with them from a monetary policy perspective,” he said. “Normally you want to watch these kinds of supply shocks closely, but if they happen against a backdrop of already rising inflation, it may not be the same as if we were entering this period of low and stable inflation.”
On employment, Hammack said the labor market was “about in equilibrium” but said it was a “strange balance” given the low level of job creation and the slow increase in supply.
At their March meeting, FOMC officials said they expected one more rate cut this year, but there was considerable disagreement. Markets on Wednesday morning were pricing in a roughly one-in-three chance of a rate cut this year, according to CME Group.
