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Fed President Emphasizes Patience Amid Tariff Uncertainty
Beth Hammack, President of the Cleveland Federal Reserve, expressed the need for patience in evaluating the influence of tariffs on inflation and economic growth during an interview on CNBC’s “Squawk Box.” This marks her first broadcast since taking over the central bank district in August 2024.
Hammack acknowledged the current climate of uncertainty and refrained from committing to any specific measures regarding interest rate adjustments. She stated, “I think we need to be patient. This is a time when we want to ensure that we are moving in the right direction rather than hastily in the wrong one.” Hammack emphasized the importance of thoroughly analyzing the available data before making any decisions, highlighting the quality of the existing economic metrics.
Her comments arrive at a pivotal moment for the Federal Reserve, which is navigating the ramifications of President Donald Trump’s tariffs on inflation and employment rates. Concerns have been raised by several Fed officials, including Chair Jerome Powell, about how these tariffs could challenge the dual mandate of the central bank, creating complexities in monetary policy formulation.
“We might see a conflict between our two primary goals, which complicates the situation for monetary policy,” Hammack noted, indicating that scenarios with rising inflation alongside declining employment could prove particularly difficult to manage.
Market predictions suggest the Federal Reserve will likely maintain current interest rates at its upcoming meeting on May 6-7 and possibly resume rate reductions in June. Forecasts imply there may be three to four rate cuts by year-end, based on data from CME Group.
Although Hammack will not have a vote on the Federal Open Market Committee this year, she will be able to contribute to rate setting by 2026. She remarked that if concrete data emerges by June, a response from the committee could likely occur, pending the direction indicated by that data.
Recent market volatility has escalated due to the uncertainty surrounding tariff policies and the Fed’s potential responses. Stocks have faced challenges, Treasury yields have increased, and the U.S. dollar has experienced declines.
With a background at Goldman Sachs, Hammack acknowledged the significance of market fluctuations while emphasizing that the central bank’s focus should remain on their broader economic impact. “Our responsibility lies in understanding how market dynamics influence households and businesses, shaping the real economy rather than the markets themselves,” she articulated. “Our aim is to guide the real economy.”
She further explained that while “hard” economic indicators like unemployment rates and inflation figures remain relatively stable, “soft” data, such as business surveys, reveal substantial concerns among companies. Hammack detailed the anxiety businesses feel regarding uncertain conditions, which is prompting some to pause their investment and hiring plans.
“I wish I had a crystal ball. Unfortunately, we do not possess one,” she concluded, underscoring the complexities faced by policymakers.
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