During a broadcast interview on Thursday, Cleveland Fed President Beth Hammack emphasized the importance of patience among policymakers when evaluating the effects of tariffs on inflation and economic growth.
This marked Hammack’s first media appearance since she took over leadership of the Federal Reserve district in August 2024. She highlighted the prevailing uncertainty in the economic landscape, steering clear of a firm commitment regarding future interest rate decisions.
“I think we need to be patient. I think this is a time when we want to make sure we’re moving in the right direction, than moving too quickly in the wrong direction,” she stated during her interview with Finance Newso’s “Squawk Box.” She expressed a preference for carefully analyzing the available data, calling current economic indicators “really good.”
Hammack’s comments come at a critical juncture for the Federal Reserve, which is currently tasked with evaluating how President Donald Trump’s tariffs are influencing inflation and employment levels.
Various officials from the central bank, including Chair Jerome Powell, have expressed concerns that these tariffs may challenge both components of the Fed’s “dual mandate,” complicating the calibration of monetary policy. Hammack articulated her apprehensions about balancing these competing priorities.
“It could be that we have the two sides of our mandate in conflict, which is the most challenging for monetary policy,” she acknowledged. “If we’re facing higher inflation alongside lower employment, that complicates matters significantly.”
Market analysts anticipate that the Fed is likely to maintain its current interest rates during the upcoming meeting on May 6-7. They predict that rate cuts may resume in June, with projections indicating a total of three to four cuts by year-end, according to data from CME Group.
“If we have convincing data by June, then I think you’ll see the committee move if we’re clear on the direction,” Hammack said regarding potential policy changes.
The uncertainty surrounding tariff policy and its implications for Fed actions have fostered considerable market volatility in recent months, leading to stock struggles, rising Treasury yields, and a declining U.S. dollar.
With a background as a former Goldman Sachs executive, Hammack is acutely aware of market fluctuations, but she emphasizes their impact on overall economic conditions rather than the markets themselves.
“Our job is not to focus on what the markets are doing. Our job is to focus on how that will affect households and businesses, and what it means for the real economy,” she remarked. “So we’re not steering the markets. We’re steering the real economy.”
Hammack pointed out that while “hard” economic data such as unemployment and inflation figures remain relatively strong, “soft” data like surveys indicate a heightened sense of concern among businesses.
“What we’re hearing is that the uncertainty is weighing heavily on businesses,” she explained. “It’s causing challenges in their planning, influencing their decisions on larger investments, whether related to new facilities or capital initiatives, and is affecting their hiring strategies.”
“I wish I had a crystal ball. We don’t have one,” she concluded.
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