Cleveland Fed's Hammack sees no need for imminent rate cuts

Investing.com -- Cleveland Federal Reserve President Beth Hammack said she doesn’t see economic weakness that would justify immediate interest rate cuts, despite recent signals from other Fed officials suggesting a July reduction. The comments from Hammack are more aligned with what Chairman Jerome Powell said this morning, signalling patience on rate cuts.

In remarks delivered at the Barclays-CEPR Monetary Policy Forum in London, Hammack described the current policy stance as "only modestly restrictive" and said rates could potentially move in either direction depending on economic conditions.

"I don’t see a weakening in the economy that would merit imminent rate cuts, though I remain attentive to that possibility," Hammack stated, adding that holding rates steady for some time might be the best approach if both sides of the Fed’s mandate come under pressure.

Hammack noted that while the U.S. economy maintains "solid momentum," inflation remains above the Fed’s 2% target. She cited Cleveland Fed calculations showing PCE inflation likely increased to 2.3% in May, up from 2.1% in April.

The Fed official outlined multiple scenarios, including one where "the economy falters and inflation declines," which could warrant rate cuts "perhaps even quickly," and another where persistent inflation with a healthy labor market might require higher rates than expected.

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