The U.S. official who is most serious about fighting inflation is in Cleveland

By Greg Robb

The rise in consumer prices is on track to exceed the central bank's target until 2028. Cleveland Fed President Beth Hammack is trying to get that inflation rate down.

"At some point that has to stop": Cleveland Fed President Beth Hammack is laser-focused on inflation.

Part of what drives Beth Hammack's relentless focus on inflation are the conversations she's had with people who live near her office. As president of the Federal Reserve Bank of Cleveland, Hammack is part of the U.S. central-banking system, which has 12 regional banks across the country that help it gather the economic data upon which monetary-policy decisions are based.

Some of the data Hammack collects are what's known in the economics trade as soft data - anecdotes, stories, opinions and sentiment. Hammack's region is made up of Ohio, western Pennsylvania, eastern Kentucky and parts of West Virginia, and when she goes to these areas, she said she hears about one thing more than any other - the impact of high prices.

"When you talk with these low- and moderate-income families, people who are [paid] hourly, they are really struggling," Hammack said in an interview with MarketWatch. "They go from steak to ground beef, ground beef to hot dogs to beans, and at some point you're just having pasta or visiting the food bank."

Hammack has been hearing these stories ever since she left Wall Street and her job as co-head of the global financing group at Goldman Sachs and was appointed in 2024 to run the Cleveland Fed.

"Most of their paycheck is going to housing, food and transportation," said Hammack. "At some point that has to stop."

By its own measure, the Federal Reserve is failing at its stated goal of keeping prices from rising by more than 2% annually. In the 12 months ending in September, consumer prices rose by 3%. Inflation has been higher than the Fed's target since March 2021, and the central bank now expects the rise in prices to continue to exceed its 2% target until 2028. That would represent almost a decade of failure.

The Fed's key tool for fighting inflation has traditionally been to increase benchmark interest rates in order to slow the economy down. But this fall it has done the opposite, cutting rates by 50 basis points. Several Fed officials and President Donald Trump have been pushing for more cuts, and Trump is widely expected to appoint a new Fed chair in May 2026 who will lead the charge to lower rates even more.

Still, given the way the Federal Reserve votes on whether to cut rates, several Fed officials could ultimately make their own call. Hammack has emerged as the central bank's strongest voice trying to protect Americans from higher prices. She lands on the MarketWatch 25 list of the people reshaping the way we live, work, save, spend and invest.

In their decisions, Fed policy makers are guided by the central bank's dual mandate to achieve maximum employment while also keeping prices down. In an interview with MarketWatch, Hammack said she understood why some of her colleagues are concerned about the employment piece of the Fed's mission, given recent sluggishness in the labor market. However, she's not taking her focus away from prices.

"I am worried about the labor market," Hammack said. But looking at the balance between the labor market and inflation, "we've got this persistent high inflation that is sticking around, when all is said and done it will be the better part of a decade."

Emerging as a strong voice

Beth Hammack spent three decades at Goldman Sachs, the nation's pre-eminent investment bank. On Wall Street, if you are wrong for the better part of a decade, it doesn't matter if time ultimately proves you right. Nobody can afford to wait eight years to get something right. That's the mentality Hammack brings as she becomes a voting member next year on the Federal Open Market Committee, which sets benchmark interest rates.

Hammack said she doesn't support any more interest-rate cuts unless circumstances change. Trump has repeatedly said he'd like to see rates cut, and whoever he picks to take over as Fed chair next year will likely share that view. That means Hammack will be facing an uphill battle in her effort to keep prices down.

'They go from steak to ground beef, ground beef to hot dogs to beans, and at some point you're just having pasta or visiting the food bank.'Beth Hammack, president of the Federal Reserve Bank of Cleveland

One reason Trump has said he wants to lower interest rates is to help fund the federal debt. Lowering the benchmark rate would likely lower the interest rates on the notes and bonds the U.S. government sells to finance its budget deficit - at the very least those with shorter maturities. The government must keep borrowing, because it spends more than it collects in revenue.

Hammack is an expert in debt management, having served for five years, while at Goldman, as chair of the committee of Wall Street traders who advise the Treasury secretary on the government's debt-management strategy.

Fed officials want to stick to their mandate of keeping the labor market strong and inflation down, and they will likely rely on Hammack's expertise to counter arguments from the administration that the central bank should play a role in curbing the government deficit.

"If you're worried about the costs of deficits, then you should bring the deficit down, which means either cut government spending or increase taxes. That's in the purview of the administration and Congress to do. They don't need the Fed to do it," said former Boston Fed President Eric Rosengren. Trying to minimize the cost of deficits through interest rates is something Third World countries do, he added.

The pressure to cut isn't only coming from Trump, however. On Wall Street, investors are now expecting that the new Fed chair will be forceful in bringing rates down. That so-called market sentiment has helped push up the prices of just about every asset in 2025 - U.S. stocks, foreign stocks, bonds and gold.

But reality is different from market sentiment. Economists and former Fed officials say the next leader of the central bank likely won't have the votes on the 12-member interest-rate committee to push a dramatic rate-cutting agenda. It takes seven members to make a policy decision. Last summer, there was concern that Trump-appointed members of the Fed board would try to replace Fed district presidents on the committee who didn't agree with a lower-rate agenda, but that concern has eased.

The new chair will have to craft policy that incorporates the thinking of a number of regional Fed presidents, including Hammack, who have inflation concerns that are unlikely to be easily allayed.

"It's going to be an interesting period to watch the dynamics of the committee," Rosengren said. "Inflation is going to be fairly sticky, and someone like Hammack who is concerned about getting inflation back to 2% over a reasonable period of time is going to be concerned, and presumably vocal, as a voting member."

Right now, Hammack is part of a bloc of roughly nine officials who appear to be more focused on tackling the inflation problem.

"At the moment, Hammack is one voice of a pretty large bloc of hawkish officials. She's representing that bloc pretty well," said Matthew Luzzetti, chief U.S. economist at Deutsche Bank. "If the labor market stabilizes or even rebounds, then I think you will see other officials move more in line with Hammack's view that there could be limited scope to cut rates next year."

The relentless rise in prices

Americans are paying higher prices for services - everyday things like electric bills and insurance - with increases running above 3%. Most Fed officials think that some of the higher inflation currently affecting consumers and businesses is coming from Trump's tariff policies, but for the most part, they see it as a one-time boost in prices that will soon fade.

Hammack disagrees. She notes that a lot of inflation pressure is coming from services and not from imported goods. "It's hard for me to see that core services [aside from] housing is being driven by tariffs," she said.

However, she thinks that inflation from tariffs, which has so far been more muted than many economists anticipated, could also spike early in 2026. "There are a lot of contracts to get renegotiated when you get to the beginning of the year. And so it could be that we see pricing come through," she said.

'If you're worried about the costs of deficits, then you should bring the deficit down, which means either cut government spending or increase taxes. That's in the purview of the administration and Congress to do. They don't need the Fed to do it.'Eric Rosengren, former president, Federal Reserve Bank of Boston

When consumer inflation spiked to 7% in the summer of 2022, the Fed raised interest rates above 5%. The aggressive move from the U.S. central bank helped bring inflation down from 7% to 3% without causing an economic recession. But that did not bring the absolute price of goods and services down - it just slowed the rise in prices from extremely high to merely high levels.

In the fall of 2024, shortly after Hammack took up her new post, the Fed cut rates by 1 percentage point over three meetings. Hammack was a voting member on the Fed's interest-rate setting committee at the time. She dissented from the last cut, of a quarter-point in December 2024, after supporting the first two, which were a half-point and a quarter-point, respectively.

"We had a line of sight to inflation coming down toward our target. We'd gone from above 7 to below 3%. We were headed in the right direction," Hammack said.

Looking back, Rosengren said the Fed initially appeared on track to effectively combat inflation in 2025 as it slowly started moving in the direction of the Fed's 2% inflation target. But the tariffs announced by the Trump administration in April of this year derailed those efforts, he said.

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11-13-25 0900ET