FOMC voter Hammack aligns with "watchful waiters" in 2026: interest rate cuts will not be considered before inflation continues to cool.

In 2026, Federal Reserve FOMC voter and Cleveland Fed President Beth Hamack said that before supporting the Fed to reopen the path of interest rate cuts, she wants to see inflation significantly fall further. Hamack said in an interview with Fox Business News on Monday: "We have not met the requirements in achieving the inflation target. I believe it is important for us to continue to be cautious about the interest rate path and maintain a wait-and-see stance to see how all the new policies implemented by the Trump administration will affect inflation and employment." The market widely expects the Fed to once again keep rates unchanged at the meeting in Washington on July 29-30. Despite two Fed officials nominated by Trump - namely Fed governors Waller and Bowman implying that they may support a rate cut at the Fed's monetary policy meeting in July, other Fed officials speaking in public have stated the need for more time to assess the impact of tariffs on inflation. In the latest public interview on Monday, Cleveland Fed President Hamack explicitly stated that she would not support a rate cut unless she sees further decline in inflation; most Fed officials are also inclined to stay put and wait for the specific impact of new policies such as tariffs on economic data, especially as some officials expect summer inflation to rise due to tariffs. This suggests that, just as widely expected by the interest rate futures market, the Fed FOMC meeting on July 29-30 is likely to maintain the current rate range, and the market needs to pay attention to whether the future trends of US prices and employment provide "stronger evidence" for a rate cut later this year. Hamack said in the interview that she has heard that some companies are pausing or cutting back on investment plans until they further understand the impact of tariffs on them. However, she said recent data shows the US economy remains resilient, and Fed officials can afford to be patient. "I see the economy as still quite resilient," Hamack said. "I see the US economy performing very well, and unless we see substantial softening in the labor market, I don't think there is a real need to cut rates." Hamack declined to reveal how many times she expects the rates to be cut this year, but she added that she believes the Fed's benchmark rate is close to a neutral level - a rate level that will neither result in an overheated economy nor slow down US economic growth. After the unexpectedly strong non-farm jobs report released earlier this month, as President Trump threatened to impose additional tariffs on other countries over the weekend, the inflation outlook faces significant uncertainty, causing global traders to significantly cool off expectations for a Fed rate cut, leading traders in the bond futures market to unwind some of their large bullish bets on the US bond market. The Fed has kept its benchmark rate unchanged since December last year, with Fed officials led by Powell adopting a cautious "wait-and-see stance" in interviews, rather than supporting a rate cut in July as Waller and Bowman do. Powell told lawmakers last month that if it weren't for the uncertainty in future price prospects due to tariffs and the case of declining inflation, the Fed should have already started cutting rates. He also warned that there is currently no need to adjust the rate policy hastily. In addition, Powell also said he expects to see an increase in inflation readings this summer. However, Powell also admitted in recent speeches that there is a high degree of uncertainty about the magnitude, timing, and sustainability of inflation increases. Trading data from the SOFR options market shows that options traders generally bet that the Fed's first rate cut this year will be in September, and traders expect a cumulative 50 basis point rate cut this year, with each cut being 25 basis points - betting that the second rate cut will occur in December. SOFR options are even beginning to show signs of heavy condor strategies, which is a financial expression of the market's long-term expectation for the Fed to remain stagnant. In other words, some options buyers are positioning themselves against rate cuts, betting on a more hawkish policy. This expectation is similar to the rate cut expectation of Wall Street major banks like Morgan Stanley, with Morgan Stanley economists recently predicting that the Fed will not choose to cut rates in 2025, and maintain the expectation that core PCE inflation will rise to 3.5% by the end of the year, and predict that Trump's tough immigration policies will push labor supply at a steady pace, thus keeping the labor market tight. Trump has repeatedly criticized Powell's decision to maintain rates unchanged this year, even stating in an interview last month that he would choose a successor as Fed chairman who is willing to cut rates. Powell's chairmanship term will end in May 2026.