Cleveland Fed's Hammack Skeptical of Further Cuts

By Matt Grossman

Cleveland Fed President Beth Hammack suggested Thursday that she is skeptical the Fed can afford to opt for further interest-rate cuts, given the persistence of inflation and the monetary easing from the rate cuts the Fed has already completed.

Speaking to a club of economists in New York City, Hammack said that after a percentage point of rate cuts last year and another half point of cuts over the past two Fed meetings, the central bank's policy stance is now doing very little, if anything, to restrain an economy that is still producing above-target price increases.

She acknowledged that the labor market has cooled, a trend that typically calls for lower interest rates. But she said that weighing that risk against stubborn inflation, the Fed has limited room to move toward easier policy.

"After last week's meeting, I see monetary policy as barely restrictive, if at all," Hammack said, according to a published text of her remarks. "It's not obvious to me that monetary policy should do more at this time."

Conversations with private-sector bosses have increased Hammack's concern that more inflation could lie ahead, she said.

"Virtually no one wanted to be the first to raise prices," she said. "But given the cost pressures they are facing, a number of those business leaders said the reality is that they will likely have to do so early next year."

Hammack does not have a policy vote this year under the system that rotates voting seats among the Fed's regional reserve-bank presidents annually, but will regain her role as a voter in January. Last year, she used her final vote of 2024 to dissent against the Fed's quarter-point rate cut in December.

At the Fed's October meeting, all but one voter, Kansas City Fed President Jeffrey Schmid, supported bringing rates lower. But comments from Fed officials since then suggest that further reductions are less of a sure bet. Chair Jerome Powell said a December cut is "far from" a forgone conclusion in his post-meeting press conference. Chicago Fed President Austan Goolsbee, a voter this year, also has suggested hesitancy about backing a further cut.

Traders in interest-rate futures markets still see a quarter-point reduction in December as the most likely move, assigning roughly 7-in-10 odds to a cut. A vacuum of government data during the federal shutdown has made the path forward less clear, but the implied probability of a cut increased Thursday after private-sector data from Challenger, Gray & Christmas, a placement firm, suggested a rise in layoffs last month.

Write to Matt Grossman at matt.grossman@wsj.com

(END) Dow Jones Newswires

November 06, 2025 12:14 ET (17:14 GMT)