FOX Enterprise’ Edward Lawrence sits down with Cleveland Federal Reserve President Beth Hammack to debate the U.S. economic system, fee cuts, the affect of commerce offers, and extra.
A member of the Federal Reserve Board of Governors on Monday mentioned that the U.S. economic system is “really healthy” and that there is not at present a necessity to chop rates of interest barring a deterioration within the labor market amid uncertainty over the affect of tariffs on inflation.
Federal Reserve Financial institution of Cleveland President Beth Hammack spoke solely with FOX Enterprise Community’s Edward Lawrence and mentioned she thinks the central financial institution is in a spot the place it might wait to make modifications to rates of interest whereas it sees how financial circumstances evolve.
“When I step back and think about where the economy is overall, I see an economy that’s really healthy. You’ve got a labor market that’s been at 4% to 4.2%, stable, healthy, right around that maximum employment side of our mandate,” Hammack mentioned.
Cleveland Federal Reserve President Beth Hammack speaks on the Columbus Metropolitan Membership in Columbus, Ohio, on April 16, 2025. (Brian Kaiser/Bloomberg through Getty Pictures / Getty Pictures)
“And you’ve got inflation, which has made progress from above 7% right in the height of the pandemic to below 3%. But we’ve been hanging out in that same range below 3% for some period of time, and so I think it’s important that we wait and see how all of the new policies that have been put forward are going to impact inflation,” she added.
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Hammack mentioned that the latest financial information suggests one element of the Fed’s twin mandate to advertise secure costs close to 2% long-run inflation and most employment is in a greater place than the opposite, so the present degree of rates of interest is acceptable.
“I walk into every meeting with an open mind, waiting to see where the data is going to take us, where the conversation takes us, and what to do. But from where I sit and what I see, what I see is that we’re hitting on our employment side of the mandate, we’re not there yet on the inflation side of the mandate, and so I think it’s important for us to maintain a restrictive posture of monetary policy, to make sure we’re getting inflation down to our target of 2%.”
Cleveland Federal Reserve President Beth Hammack mentioned she thinks the central financial institution is in a spot the place it might wait to make modifications to rates of interest whereas it sees how financial circumstances evolve. (Photographer: Nathan Howard/Bloomberg / Getty Pictures)
The Cleveland Fed chief mentioned that the Fed is “pretty close to where the neutral rate is” and that “I see an economy that’s resilient, I see one that’s working really well, and I don’t see a need to really reduce unless we see material weakening on the labor side.”
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Hammack was requested if the Fed’s present degree of rates of interest, which is at a variety of 4.25% to 4.5% this yr, may run the danger of slowing the economic system and mentioned that inflation remaining stubbornly above goal has made it necessary to maintain charges considerably restrictive.
“The modestly restrictive stance that we have right now is important because inflation is still running above our target. We’ve been running around 2.7%,” she mentioned. “As I mentioned last year when we did those cuts in the fall, that was because we had seen inflation come down from above 7% to below 3%. We’re still right now in that ZIP code.”
“If you look at core inflation, it was 2.7% when we started those rate reductions in September. It’s still right around 2.7%. So we had expected to make more progress on that, and we really haven’t seen any, so that’s what the restrictive posture is meant to help,” Hammack mentioned.
“The modestly restrictive stance that we have right now is important because inflation is still running above our target,” Cleveland Federal Reserve President Beth Hammack mentioned. (Spencer Platt/Getty Pictures / Getty Pictures)
“I don’t think that we’re particularly restrictive right now, and I think the economy is performing well. If we see the economy weakening, if we see the growth picture slowing, if we see the labor picture slowing, then of course we’re going to respond to that. We take both sides of our mandate very seriously,” she added.
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President Donald Trump’s tariffs have created uncertainty for companies and customers, notably with the timing and depth of worth will increase, which have impacted the Fed’s evaluation of when it ought to go about rate of interest cuts.
Federal Reserve Chair Jerome Powell beforehand famous that the uncertainty about these tariff impacts contributed to the central financial institution refraining from rate of interest cuts up to now this yr. Hammack echoed that sentiment, saying that the central financial institution wants to attend and see how tariffs play out throughout the economic system because it evaluates its subsequent rate of interest transfer.
Federal Reserve Chair Jerome Powell beforehand famous that the uncertainty about these tariff impacts contributed to the central financial institution refraining from rate of interest cuts up to now this yr. (REUTERS/Amanda Andrade-Rhoades/File Picture / Reuters Images)
“If you look on very specific things, if you look at steel, which had a pretty clean 25% tariff that was put in place in March, increased last month to 50%, you can see that over a three-to-four month period, the price of steel went up by about 23%, 21%,” she mentioned. “And so you do see in discrete places where you had a very clear, very specific tariff, you can see some of those impacts coming through.”
“In some of these other places where you had these broader country tariffs, and then they got reduced, maybe they’re going back up again. It’s not clear where they’re going to end up,” Hammack mentioned.
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“There’s just a lot more uncertainty and what we hear from businesses is that they’re still working through their inventory, they have a lot that they purchased before the tariffs came in place, and they’re still working to get that out,” she famous.
The Fed’s subsequent financial coverage assembly is scheduled for later this month on July 29-30.
