U.S. Inflation Outlook Remains Worrisome for Hammack at the Fed

Cleveland Federal Reserve President Beth Hammack voiced concern that inflation could remain above the central bank’s 2% target for several more years, reinforcing her stance against further interest-rate cuts.

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In a CNBC interview from Frankfurt, Hammack pointed out that the Fed has already missed its inflation goal for more than four and a half years, and she doesn’t expect that to change anytime soon.
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“I continue to see persistent inflation pressures in headline numbers, in core measures, and most worrisome, in services,” she explained. “My forecast suggests inflation won’t return to the 2% target until late 2027 or even early 2028.”

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While many Fed officials have said the impact of tariffs on consumer prices has been relatively limited, Hammack struck a more cautious tone. She indicated she disagrees with colleagues who see the effect as a one-off issue.

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“I remain uneasy about the overall inflation picture,” she noted. “That’s why I believe it’s important to keep monetary policy in a restrictive position for now.”

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Recent economic data underscored her caution. Government figures released last week showed U.S. personal spending in August grew faster than expected, while underlying inflation pressures stayed firm.

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On September 17, the Fed trimmed its benchmark federal funds rate by a quarter percentage point—the first adjustment since December—despite political pressure from the Trump administration for deeper cuts.

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Hammack described the current policy stance as “mildly restrictive” and emphasized that her estimate of the neutral rate sits on the higher end of the committee’s range.
“In my view, we’re not far from neutral,” she said. “I’d only support moving into accommodative territory if there were clear signs of significant economic weakening, and right now I don’t see that happening.”

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The Fed’s next policy gathering is scheduled for October 28–29. Futures markets currently price in about a 90% probability of another quarter-point rate reduction.

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Despite that, Hammack’s comments suggest she would prefer to hold the line until inflation shows more progress toward the Fed’s target. Her perspective adds to the ongoing debate within the central bank about how much policy easing is appropriate.

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Hammack was also pressed on the issue of political influence at the Fed. She downplayed the idea that current debates over monetary policy are unusual, pointing out that governments historically have weighed in on central bank actions.

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Still, she acknowledged some unprecedented dynamics. “Having a governor on leave from an administration role hasn’t happened before, and neither has a sitting president attempting to unseat a governor,” she said.

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With a federal funding deadline approaching this week, Hammack commented on the potential economic fallout of a government shutdown.
“I would expect a shutdown to exert some drag on GDP, with the impact growing the longer it lasts,” she explained. “We’ll have to monitor how this particular situation develops and what the longer-term consequences might be.”

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Hammack’s remarks highlight the Fed’s balancing act: inflation remains stubbornly high, yet growth indicators have not weakened enough to justify a more accommodative policy. Her outlook that inflation may not return to target until 2028 suggests the path toward rate cuts could be slower and more cautious than markets expect.

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For investors, the message is clear policy is likely to stay restrictive until inflation convincingly cools, making Fed communications and upcoming data releases critical to watch in the months ahead.

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