NEW YORK: Federal Reserve Bank of Cleveland President Beth Hammack on Thursday called for patience on monetary policy amid high levels of uncertainty, and did not rule out monetary policy changes by June if the data suggested action was needed.
“We’ll be watching the data carefully and I enter every meeting with an open mind about whether it’s a time that we should be continuing to be patient, or a time that we should take action,” Hammack said in an interview on CNBC. “If we have clear and convincing data by June, then I think you’ll see the committee move, if we know which way is the right way to move at that point in time,” she said.
Hammack was addressing the outlook for a rate cut amid a very challenging policy environment. The trade agenda of President Donald Trump is in the view of many economists likely to drive up inflation from already high levels while at the same time increasing unemployment and depressing growth. Some forecasters even see recession.
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That outlook does not argue for clear decisions for the Fed, which is legally charged with keeping inflation steady and the job market at full employment.
A wide range of policy makers, including Hammack, have argued now is a time to wait and see how the economy fares as Trump’s policy changes work their way into the economy, even as financial markets are pricing for a string of cuts in what is now a federal funds target rate range of between 4.25% and 4.5%.
Hammack was asked if she could see the Fed easing at the May 6-7 Federal Open Market Committee meeting and appeared to lean strongly against that.
“I think it’s too soon” to change interest rate policy next month, Hammack said.
“I think we need to be patient. I think this is a time when we want to make sure we’re moving in the right direction,” she said. “I would rather take our time” and see how the economy performs.
Hammack also said she does not have a base case for the economy right now but is thinking of the outlook in terms of scenarios.
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