Latest news with #BethHammack
New York Times
3 days ago
- Business
- New York Times
Solid Report Bolsters Fed's Patient Approach to Interest Rate Cuts
A solid jobs report in May has reinforced the Federal Reserve's stance that it can take its time before restarting interest rate cuts. Officials paused in January amid extreme uncertainty about the economic outlook as a result of President Trump's policies. The central bank has signaled it will need to see clear signs that the labor market is weakening before lowering rates again, a higher bar than in the past given expectations that inflation could reignite later this year. The big wild card is Mr. Trump's tariffs, the scope and scale of which have repeatedly changed since his return to office. That whiplash has left businesses and policymakers in limbo, uncertain how significantly these policies will cause prices to rise and growth to slow. After reaching its lowest level in more than 50 years in 2022, unemployment has edged up as companies have slashed the number of available positions and slowed hiring. Fewer Americans are quitting their jobs, muting wage growth. Jobless claims are up, although layoffs have stayed low. Friday's data showed that the labor market is continuing to lose momentum but is not yet cracking: Employers added 139,000 jobs last month, and the unemployment rate was stable at 4.2 percent. Haunted by pandemic-era staffing issues, companies appear hesitant to let go of employees. Instead, they have opted to cut back on hours or institute more flexible schedules. That is the takeaway from Beth Hammack, president of the Federal Reserve Bank of Cleveland, who spoke to businesses across Cincinnati this week. She said she had heard nothing in those conversations to suggest that the Fed needed to immediately lower borrowing costs, even if business owners are on edge. 'I legitimately do not know which way this is going to break,' she said in an interview. The labor market looks healthy, Ms. Hammack said, and with inflation not yet back to the Fed's 2 percent target, she suggested that interest rates should be at a high enough level to continue weighing slightly on demand. 'I would rather wait and move quickly to play catch-up if I really don't know what the right next move is,' Ms. Hammack added. 'And right now, I really don't know what the right next move is based on all of the information and policies that we're responding to.'
Bloomberg
21-05-2025
- Business
- Bloomberg
Fed's Daly, Hammack on Outlook for US Economy
San Francisco Fed President Mary Daly and Cleveland Fed President Beth Hammack talk about their outlook for the US economy and adopting a wait-and-see approach to policy, in an event moderated by Atlanta Fed President Raphael Bostic. They all spoke at the Atlanta Fed's "Financial Intermediation in Transition" conference. (Source: Bloomberg)
Axios
20-05-2025
- Business
- Axios
Exclusive: Cleveland Fed official's three scenarios for tariff-hit economy
The traditional way to approach projecting the economy is to describe a baseline scenario — what seems like the most likely trajectory — with risks on either side. That may not be the best way to think of the outlook right now, a top Fed official tells Axios. The big picture: With uncertainty around both what trade and other policy changes will bring, and how they will affect employment and inflation, Cleveland Fed president Beth Hammack is thinking about a range of distinct economic scenarios, rather than one base case. She and other leaders of the central bank will submit their projections for GDP, inflation, interest rate policy and more next month. It's an especially fraught time to be doing so, given complex policy crosscurrents around trade, tax and other policies. The so-called Summary of Economic Projections will be published when the Fed's next two-day meeting concludes on June 18. What they're saying:"I'm grateful that I have four weeks to work on coming up with a modal case, because right now I haven't really been operating with a base case," Hammack said. "I've been operating in a couple different scenarios." "To come up with a modal case that you have a lot of confidence in, I think at this particular moment is going to be really challenging," Hammack says. Scenario 1: Tariffs have a one-off price effect, but economic growth takes a hit from policy uncertainty. The possibility that tariffs bring up price levels, but don't do so consistently, results in a one-time increase in prices. But Hammack says this might come alongside a "tremendous amount of uncertainty that weighs on economic activity," with growth declining and the labor market falling off. "In that situation, we'd want to be attentive to the employment side of our mandate and potentially ease policy — and potentially very quickly, if we had the evidence that this is what was happening," she says. Scenario 2: The labor market holds up, but tariffs are inflationary. It's possible that businesses hold the line on their workforces, a pandemic-era fear that they might not be able to replace staff when the economy bounces back. "Because it took them so long and it was so difficult to hire and train their staff over the past several years, it could be the case that they hold on to people for a really long time," Hammack says. She adds that in this scenario, price pressures from tariffs become sticky because of the way the levies have been rolled out. "It becomes more persistent and more inflationary because the tariffs are layered in — the announcement, the withdrawal, and then the possibility of new announcements," Hammack says. Scenario 3 is what Hammack sees as most likely: a stagflationary outcome where the economy slows alongside higher inflation. "That's where it's really difficult for monetary policy," Hammack says. "We're going to have to have good insights and good understanding of how much we're missing each side of the mandate and how long those misses persist — and then we can decide what the right course of action is." Yes, but: Hammack says there are other factors — including the White House tax bill or its deregulatory efforts — that complicate the forecast.
Wall Street Journal
10-05-2025
- Business
- Wall Street Journal
Hammack Says Fed Could Stay on Hold for a While
Cleveland Fed President Beth Hammack said uncertainty over potential changes in trade and fiscal policy could extend the amount of time the central bank stays in its current wait-and-see stance on interest rates. 'I don't want to put a time frame on it, but I think it can be a while,' said Hammack during an interview in Palo Alto, Calif., on Friday. 'We might need to wait longer than you would otherwise if you had a clearer picture of where things are. Being preemptive is good when you know what to do and where you need to head. Right now is not a good time to be preemptive.' Fed officials are trying to sort out whether increases in tariff rates will slow economic activity and raise prices. Officials have said they're focused on making sure a one-time increase in prices doesn't turn into a period of rising inflation.
Bloomberg
10-05-2025
- Business
- Bloomberg
Flock of Fed Speakers Show No Eagerness to Consider Rate Cuts
On a day when more than half of the Federal Reserve's policymakers offered public remarks, not one made it sound like the US central bank was near lowering interest rates. 'I am usually inclined to take action; but in this case, taking no action may be the best choice to balance the risks coming from further elevated inflation and a slowing labor market,' Cleveland Fed President Beth Hammack said Friday in remarks prepared for a conference at Stanford University's Hoover Institution in California.
