①Beth Hammack, President of the Cleveland Federal Reserve, stated that she believes the current monetary policy is "in a good position" and can maintain interest rates unchanged; ②According to her forecast, the Federal Reserve might "remain on hold for an extended period."
Cailian Press report from February 11 (edited by Xia Junxiong) – On Tuesday (February 10), Beth Hammack, President of the Cleveland Federal Reserve, stated that she believes the current monetary policy is "in a good position" and can maintain interest rates unchanged. According to her forecast, the Federal Reserve might "remain on hold for an extended period."
Hamarck is one of the four regional Federal Reserve Bank presidents with rotating voting rights on the Federal Open Market Committee (FOMC) this year.Federal Open Market CommitteeShe spoke on Tuesday at the Ohio Bankers League Economic Summit held in Columbus, Ohio.
Last month, the Federal Reserve maintained the federal funds rate within the range of 3.5%–3.75%, following three consecutive interest rate cuts in the fall of last year.
"I believe monetary policy is currently in a phase suitable for maintaining a wait-and-see approach. While evaluating the latest data, we can weigh whether and how to further adjust policies. Based on my forecast, we may maintain the status quo for an extended period," Hammack stated.
Hammack pointed out that the level of inflation in the United States remains high and has generally moved sideways over the past two years. She believes that this year's inflation rate could remain close to 3%, similar to the past two years.
The Federal Reserve has set a long-term inflation target of 2% and tends to use core PCE (Personal Consumption Expenditures Price Index) as its measure of inflation.
Hammack noted that she needs to see more decisive evidence showing that price levels are consistently declining. Rather than attempting to 'fine-tune' interest rates, she prefers to adopt a patient approach while assessing the impact of last fall’s three interest rate cuts on economic growth.
In Hammack’s view, monetary policy is currently near a neutral level, meaning it does not impose substantial constraints on economic activity.
Hammack also stated that she believes the risks of future interest rate increases or decreases are roughly balanced.
Although Hammock's baseline expectation is that inflation will moderate this year, she is closely monitoring the impact of tariffs on prices.
Hammock noted that many companies have reported that the increase in tariffs has driven up costs; some businesses have already passed these costs onto consumers, while others indicated they would raise prices further in the future. She also mentioned that rising electricity prices and health insurance costs are contributing to overall cost increases.
She stated, "At this point, it is still unclear whether these widespread cost pressures have peaked."
The labor market is stabilizing
Regarding employment, Hammock believes that the labor market appears to have stabilized.
She pointed out that the current unemployment rate of 4.4% is close to the level seen in September last year, showing overall stability, with the number of job seekers roughly matching the number of vacancies.
She also mentioned that the number of initial claims for unemployment benefits remains at a low level. Although the number of large-scale layoff announcements by companies is in line with historical averages, some companies have indeed announced plans to cut jobs.
Hammock expects that, driven by previous interest rate cuts and fiscal support, economic growth will accelerate this year, encouraging more businesses to advance investment projects, strengthening the labor market, and pushing the unemployment rate down further over the course of the year.
The banking system and central bank independence
When discussing the banking system, Hammock stated that a robust banking system is not only crucial for the economy but also key to the effective transmission of monetary policy. She believes that by tailoring regulatory adjustments and prudent oversight to specific conditions, the Federal Reserve can ensure that the banking system remains a vital pillar supporting economic growth over the long term.
She said, "We should be aware that excessive relaxation of regulatory rules may lead to a decline in the resilience of the banking system, making it difficult for banks to play their expected role during periods of economic stress."
The issue of the Federal Reserve's independence has drawn significant attention recently due to ongoing pressure from U.S. President Trump for substantial interest rate cuts. Hamak noted that international experience shows that countries with weaker central bank independence tend to face higher levels of inflation.
Editor/Stephen
