Hammack said she prefers to hold policy steady until further evidence that inflation is resuming its path to the central bank’s 2% objective.
Cleveland Federal Reserve President Beth M. Hammack, the lone dissenter who opted to keep the key interest rate unchanged at 4.5%-4.75% in the December policy, said on Friday that her decision was driven by recent strong economic data and expectations of inflation remaining high next year.
Hammack said she prefers to hold policy steady until further evidence shows that inflation resumes its path to the central bank’s 2% objective.
“In my mind, maintaining the target range for the federal funds rate at 4-1/2 to 4-3/4 percent at the December 2024 meeting was the best choice given the strength of recent economic data, accommodative financial conditions, and my forecast that inflation will remain somewhat above 2 percent over the next year amid a healthy labor market,” Hammack said in a statement released by the Cleveland Fed.
On Wednesday, the Fed delivered the much-anticipated 25 basis point rate cut, bringing the key interest rate down to 4.25%- 4.5%, levels seen in December 2022.
The Cleveland Fed president highlighted that she views her decision as a close call and appreciates the diverse perspectives of her FOMC colleagues.
Fed Chair Powell had acknowledged that the decision to reduce the key rate by 25 bps was a closer call but the right one.
“I would say today was a was a closer call but we decided it was the right call because we thought it was the best decision to foster achievement of both of our goals — maximum employment and price stability,” he had said at the FOMC conference.
After witnessing a sell-off following the policy announcement, benchmark U.S. indices were trading mixed on Friday. The SPDR S&P 500 ETF Trust (SPY) was up by 0.08%, while the Invesco QQQ Trust, Series 1 (QQQ) traded lower by 0.05%. Retail sentiment on Stocktwits ranged from ‘neutral’ to ‘bearish’ for these ETFs.
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