JACKSON HOLE, Wyo. — Cleveland Fed president Beth Hammack said Thursday that the case for cutting interest rates in September would be a hard one to make given recent economic data.
“There’s a lot of data we’re going to get between now and September and I walk into every meeting with an open mind about what the right thing to do is, but with the data I have right now and with the information I have, if the meeting was tomorrow, I would not see a case for reducing interest rates,” Hammack told Yahoo Finance at the Jackson Hole Economic Symposium.
Hammack, who said the Fed needs to “stay laser focused” on bringing inflation down to its 2% target, joined her colleague, Kansas City Fed president Jeffrey Schmid, in describing the current stance of monetary policy as “modestly restrictive.”
Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments
Hammack also indicated the central bank should gain more clarity around the impact tariffs have on inflation before determining whether to cut rates, views echoed by her colleagues, Chicago Fed president Austan Goolsbee and Atlanta Fed president Raphael Bostic, last week.
“I’m not seeing any signs of potential significant downturns [in the economy], and to me, that’s what would require us to move into an easy stance of policy, rather than our currently modestly restrictive stance, so I don’t think we have far to go. I think it could be quite some [time],” said Hammack.
With investors still expecting the Fed will cut rates in the coming weeks — and with pressures building on the Fed politically to begin a rate-cutting cycle — this view puts Hammack and Schmid among those Fed officials still focused on inflation pressures.
Last week’s Consumer Price Index (CPI) report showed that while headline inflation was lower than consensus forecasts, on a “core” basis prices rose more than expected. The Producer Price Index (PPI), a read on wholesale prices, also showed inflation pressures building.
“My biggest concern is that inflation has been too high for the past four years. Right now, it’s been trending in the wrong direction, and so I think it’s really important that we stay modestly restrictive to make sure that we can bring inflation back under control,” Hammack said.
The July jobs report showed hiring slowed last month, while over 250,000 job additions were revised away from the May and June data, pushing down three-month average payroll growth to just 35,000 per month.
“I do expect from the conversations I’ve had that we’re not going to see the full impact of tariffs pass through until sometime next year,” said Hammack. “It usually takes three to four months to start seeing the early impacts of tariffs, and so we’re just at that point right now.”
The uncertainty around the process of implementing tariffs — with several key questions still outstanding — leaves any timelines on the economic impact up in the air, however.
“The way that tariffs have been implemented here, there was a lot of negotiation, a lot of back and forth for a much longer time period, and so it may not be that the economic theory really holds in practice,” Hammack said.
Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.
Click here for the latest economic news and indicators to help inform your investing decisions
Read the latest financial and business news from Yahoo Finance
