Fed's Hammack sees no need to hike rates to lower inflation at this time

Core Viewpoint - Cleveland Federal Reserve President Beth Hammack believes that the U.S. central bank does not need to raise interest rates currently to address inflation pressures, although she acknowledges that her perspective may change in the future [1][2]. Interest Rate Policy - Hammack stated that raising rates is "not my base case right now," emphasizing the need for a slightly tight monetary policy to manage inflation while considering the softness in the job market [2][5]. - She expressed a preference to be on the restrictive side of neutral due to ongoing inflation pressures and signs of labor market softening [3][4]. Conditions for Changing Views - Hammack outlined potential factors that could alter her stance on interest rates, including a healthier labor market and persistent high inflation levels [4][6]. - She noted that if payroll numbers indicate a stronger labor market rather than just changes in immigration flows, her viewpoint might shift [4]. Current Economic Context - The Federal Reserve is concerned about elevated inflation but has recently eased short-term borrowing costs to support a weakening job market [5][6]. - The ongoing U.S. government shutdown has complicated the Fed's ability to access key economic data, impacting their decision-making process [6]. Inflation and Labor Market Dynamics - Hammack highlighted that the Fed's dual mandate of stable inflation and a strong job market presents challenges, as these goals can be somewhat contradictory [6][7]. - She acknowledged difficulties in hiring but does not currently foresee a significant downturn in the labor market [7].