Fed Newcomer Counsels Patience on Cuts
The Wall Street Journal|January 18, 2025
Cleveland Fed chief, a Wall Street vet, says 'we still have an inflation problem'
NICK TIMIRAOS
Fed Newcomer Counsels Patience on Cuts

When Beth Hammack was selected last year to lead the Federal Reserve Bank of Cleveland, one of her former colleagues on Wall Street predicted she would waste little time in leaving her stamp on monetary policy.

Hammack didn't disappoint. The former Goldman Sachs treasurer opposed the Fed's decision to lower interest rates at its most-recent meeting and just her third at the central bank.

Not only are prices much higher than they were a few years ago, "we still have an inflation problem. We still have a rate-of-change problem that we need to address," Hammack said in an interview Tuesday. "We've made amazing progress on it, but we need to continue to finish the job."

Reflecting on last month's rate cut, she added, "For me, that December conversation was really about, did you need to do it now, or could you be more patient and wait and see."

During much of the period after the 2008-09 financial crisis, the Fed had an uneasy relationship with Wall Street, wary of perceived closeness with the financial institutions it had rescued.

But over the past year, the central bank has promoted to its senior ranks a handful of officials with long careers in financial markets, including Hammack. Their appointments reflect a Fed that is trying to stay on top of how its policies are transmitted to the wider economy when old assumptions about interest rates and inflation are being re-thought.

Hammack voted with Fed Chair Jerome Powell in favor of a larger-than-expected rate cut of a half-percentage point, or 50 basis points, in September. At the time, "My expectation was that 75 for the year was the right thing to do," she said. The Fed made a second cut of 25 basis points in November.

This story is from the January 18, 2025 edition of The Wall Street Journal.

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This story is from the January 18, 2025 edition of The Wall Street Journal.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.