President Beth Hammack of the Federal Reserve Bank of Cleveland will be attending the 2025 Jackson Hole Economic Policy Symposium, “Labor Markets in Transition: Demography, Productivity and Macroeconomic Policy,” Wyoming, USA, August 21, 2025.
Jim Urquhart | Reuters
Cleveland Federal Reserve Chairman Beth Hammack said Monday that the US Central Bank faces challenges as it tries to balance its fight against stubborn inflation and protect its work.
“Right now, on the inflation side, we continue to worry about where we are from an inflation perspective,” Hammack told CNBC’s “Squawk Box Europe.”
“We have been missing the mission on the 2% target, the goal of inflation for over four and a half years. I continue to see pressure on inflation in both the headlines and in the core.
Asked if it was wrong for the Federal Reserve to cut interest rates given its economic background, Hamack described it as a “difficult time in monetary policy,” saying the US Central Bank faces pressure on both sides of its mission.
Her comments come shortly after stronger than expected economic data appears to have dented Wall Street’s hopes for sharp monetary easing.
The Fed approved a widely anticipated rate cut earlier this month, cutting benchmark overnight lending rates to a quarter-4.00%-4.25% range, indicating that two more are in the middle by the end of the year.
However, a robust batch of economic data has encouraged investors to dial back expectations for rapid rate cuts.
Investor attention relies on September’s non-farm salary report scheduled for Friday, but could be released by the possibility of government shutdowns.
Hammack said the US labor market appears to be “pretty healthy” and broadly balanced, but added that inflation has stubbornly surpassed the Fed’s target and does not expect prices to return to 2% until the end of 2027 or early 2028.
“Again, for me, I think that if we balance two aspects of our mission, we need to maintain a restrictive attitude in policy so that inflation can be returned to target,” Hammack said.
Former Goldman Sachs executive, Hamack is not a voter on the Federal Open Market Committee this year.
Double-sided risk
Data released Friday showed little change in US core inflation in August. The Personal Consumption Expense Price Index recorded an increase of 0.3% that month, bringing annual headline inflation to 2.7%, the Commerce Department reported late last week.
Excluding food and energy, the price level for core PCE was 2.9% per year after an increase of 0.2% for the month.
Hammack has previously suggested he would hesitate to cut interest rates as long as inflation is a threat.
In fact, recently, Federal Reserve Chairman Jerome Powell warned of the unwieldy path ahead with interest rates.
“The short-term risk to inflation is leaning upside down, and the risk to employment to employment is a difficult situation,” Powell said during a speech to business leaders in Providence, Rhode Island on September 23.
“The risks on both sides mean there is no risk-free pass,” he added.
– CNBC’s Jeff Cox contributed to this report.
