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Investing.com -- Cleveland Federal Reserve President Beth Hammack reinforced a cautious stance on interest rates in a Fox Business interview, citing continued robust labor market conditions and lingering inflationary pressures. While acknowledging significant progress on inflation, Hammack emphasized that the central bank’s work is not yet done.
“When I step back and think about where the economy is overall, I see an economy that’s really healthy,” Hammack told Fox Business. While unemployment has remained steady between 4% and 4.2%, she noted that core inflation has plateaued around 2.7%—still above the Fed’s 2% target.
Hammack said she approaches each Federal Open Market Committee (FOMC) meeting with “an open mind,” allowing economic data and internal discussions to guide her decisions. She stressed that while employment goals have largely been met, closer attention is necessary for the inflation goal.
The Fed governor gave insight into just how divided the policymaker sentiment has become, particularly around the pace and timing of future rate cuts. “Some participants saw no reductions this year,” she said, calling the internal dialogue “a robust back and forth amongst the participants, [with] many different perspectives.”
Business sentiment in the Cleveland Fed district remains cautiously optimistic, though evidence of restraint in corporate investment is mounting. “They’re worried about what’s going to be happening and how the economy is going to unfold over the next 6 to 18 months, and there’s still limit inflation,” Hammack said.
Investment hesitation appears linked not just to rates but also geopolitical and trade policy uncertainty, with tariffs emerging as a notable drag on capital planning. "We definitely have heard about some plans being cancelled. More, I’d say, have been paused... Others have been scaled down," she said of businesses, citing regional contacts.
Hammack declined to disclose her personal policy forecast but reiterated that the Fed remains close to an appropriate policy stance.