Fed’s Hammack Signals Prolonged Rate Hold, Setting Stage for 2026 Policy Clash

Cleveland Fed President Beth Hammack, an incoming voting member on the central bank's policy-setting committee, signaled interest rates will need to remain on hold for “some period of time,” pouring cold water on market hopes for imminent cuts.

In a weekend interview with The Wall Street Journal, Hammack, who will become a voter on the Federal Open Market Committee (FOMC) in 2026, outlined a hawkish stance that challenges both recent data and the views of her colleagues. “My base case is that we can stay here [with rates] for some period of time, until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially,” she said.

Hammack explicitly cast doubt on last week’s surprisingly soft November Consumer Price Index report, which showed headline inflation dropping to 2.7% from 3.1%. “I take it with a grain of salt,” she told the WSJ, citing data-collection distortions from the fall government shutdown. Her own calculations, she said, place the inflation rate closer to the 2.9% or 3.0% economists had forecast.

Appointed in 2024 after a career at Goldman Sachs, Hammack has already established herself as one of the Fed's most hawkish members. Her ascension to a voting role gives those views significantly more weight in shaping U.S. monetary policy.

A 'Massively Wide' Gap With Waller

Hammack’s comments create a stark contrast with those of Fed Governor Chris Waller, a potential candidate for the next Fed chair. Just three days ago, Waller described the current 3.5%-3.75% fed funds rate as being 50 to 100 basis points above the neutral level, implying that policy is firmly restrictive.

Hammack, however, believes the policy rate is “a little bit below” neutral, meaning she sees current policy as still being somewhat stimulative. This represents what the source article called a “massively wide delta” between two key policymakers for 2026, suggesting future policy debates could be contentious.