Fed’s Hammack: Unclear if tariffs will ultimately be one-time impact

Beth Hammack, the President of the Federal Reserve (Fed) Bank of Cleveland, struck a hawkish tone in remarks on Thursday, stressing the need to keep inflation in check. She warned that tariff impacts are only beginning to show in the economy and may intensify next year. While noting the Fed is close to neutral, Hammack dismissed the case for rate cuts in the near term.

Key Quotes

Both sides of the Fed mandate are under pressure.

Its important to maintain modestly restrictive policy to lower inflation.

Firms are trying to withhold passing on tariffs, but that can’t last forever.

It’s just now tariff impacts are starting to affect economy.

Full tariff impact won’t be clear until next year.

Unclear if tariffs will ultimately be one time impact.

Biggest concern inflation is too high, and inflation has been trending in wrong direction.

Will view job data in context of broader economic changes.

Labor supply has come down dramatically.

The Fed needs to stay “laser focused” on too high inflation.

We have a small distance to get to neutral policy.

Does not see any sign of a notable economic downturn.

Does not see imminent case for cutting rates based on current data.

Doesn’t think Fed policy is far from neutral policy, no need for stimulative policy.

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