Fed official Hammark believes that after three consecutive interest rate cuts, there is no need to adjust interest rates in the coming months and they could remain unchanged at least until spring.
She opposed recent rate cuts, fearing that inflation would remain higher than the risk of a weakening labor market. Although she has no voting rights this year, she will become a voting member of the interest rate-setting committee next year.
- The Fed has cut interest rates for three consecutive meetings; Hammark says no further adjustments are needed.
- The perspective prioritizes controlling inflation over concerns about the fragility of the labor market.
- Baseline forecast: Keep interest rates at current levels at least until spring, awaiting further evidence.
Fed: Keep interest rates unchanged, wait for signals on inflation and employment.
Hammark said there was no need to adjust interest rates in the next few months after three consecutive cuts, and the base scenario was to keep them unchanged at least until spring.
According to information from December 21st, she believes that maintaining interest rates at their current level is appropriate for a while, until there is clearer evidence that inflation is returning to target or the labor market weakens significantly.
In an interview on The Wall Street Journal's Take On the Week podcast (Thursday), she outlined the conditions for changing her stance: inflation falling to the target level or a more significant weakening of the labor market.
My base case is that we can keep interest rates at their current levels for some time, at least until the spring. Until we get clearer evidence that either inflation is falling back to the target level or there is more substantial weakness in the labor market.
Hammark's position on the interest rate committee
Hammark is not a voting member of the interest rate-setting committee this year, but will become one next year.
She opposes recent interest rate cuts because she believes the risk of persistently high Dai is more important than the risk of a vulnerable labor market. This view could impact market expectations, including those in the Cryptoasset, as interest rates and the monetary policy outlook are sensitive variables affecting risk-weighted Capital flows.
