Cleveland Fed President Beth Hammack is giving her perspective this morning following Wednesday's split FOMC decision. While the committee voted to lower rates by 25 basis points, the decision was far from unanimous, highlighting a deepening divide among policymakers regarding the path forward for inflation and the labor market.
The Split Decision: A Rare 9-to-3 Vote
The Federal Reserve voted to cut its benchmark interest rate by 25 basis points, but the decision revealed significant internal disagreement.
The Majority (9 Votes): Opted for a standard 25 basis point reduction.
The Hawks (2 Dissents): Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid voted to keep rates unchanged, arguing for patience to ensure inflation is fully tamed.
The Dove (1 Dissent): Fed Governor Stephen Miran voted for a more aggressive 50 basis point cut, likely prioritizing labor market support.
Hammack’s Stance: Aligning with the Hawks
Although she was not a voting member at this meeting, she will be a voting member in January and for the entirety of 2026. President Hammack prior to the meeting made it clear she aligns with the "no change" camp. There were 4 dissenting members who voted for no change. One of them is assumed to be Hammack. Another would be Lori Logan the Dallas Fed Pres.
Hammack comments today:
- The labor market has been gradually cooling but inflation above the target.
- Balancing both sides of Fed mandate is challenging.
- Not having government data has created a bit of a fog for the Fed.
- There is a wide range of alternative data on job market.
- Lack of data makes reading inflation harder to do.
- Very grateful government data is returning.
- Independent central banks deliver better outcomes.
- Novel that a Fed Gov. retained a connection to the White House.
8:54 AM ET:So far Hammack has not explicitly said that she opted for keeping policy unchanged, and sounds a little less hawkish than her comments from prior to the rate decision. She seems a bit more neutral from her fog without data. Is she seeing a clearer picture?
More from Hammack:
- Weaker dollar this year was not about moving away from currency.
- Is committed to achieving Fed's 2% inflation target, price pressures have been too high.
- Seeing some softening on labor side of the economy.
- Has every confidence next Fed chair will be focused on 2% inflation target.
- Local context described low higher, low fire job sector.
Shifting a bit more hawkish:
- Fed decision this week was complicated
- Job market breakeven is greatly reduced.
- Right now Fed policy is right around neutral.
- Would prefer for Fed policy to be a little more restrictive than current level.
- Will be watching carefully to see if inflation moderates and jobs stabilized.
- Economy will get boost from fiscal stimulus.
- Watching to see price increases come from delayed tariff impact
