The divide within the Federal Reserve intensifies: Harker says policy "appropriate to pause," waiting for inflation to clarify.

Beth Hammack, president of the Federal Reserve Bank of Cleveland, said that while evaluating the impact of the cumulative 75 basis point rate cut in the first quarter on the economy, the current monetary policy is appropriate to pause adjustment. "Our current stance is basically wait-and-see - we can stay at this level for a while until we have more concrete evidence that inflation is returning to target levels, or the labor market shows more substantial weakness," Hammack said in an interview with The Wall Street Journal's "Focus on the Week" podcast. The interview took place on Thursday and aired on Sunday. The Federal Reserve's latest rate cut decision on December 10 faced three dissents, the most since 2019. Officials have differing views on the path of interest rates, with some policymakers more concerned about a cooling labor market, while others believe the Fed should prioritize controlling inflation above target. The post-meeting rate forecast showed that six officials are leaning towards keeping rates unchanged. "We have cut the policy rate by 75 basis points, which should help support the part of our mission that relates to employment, but we certainly need to remain vigilant," said Hammack, who will become a voting member of the Federal Open Market Committee in 2026, "I am highly focused on ensuring that inflation returns to target levels. This is one of our primary goals and must be achieved." Policymakers received delayed economic data last week due to the record government shutdown. Despite the U.S. unemployment rate rising from 4.4% in September to 4.6% in November, the core Consumer Price Index, which excludes volatile food and energy prices, rose 2.6% year-on-year in November, the smallest increase since 2021. Hammack said she would not overemphasize any single economic report and noted that the latest inflation data may contain "noise" due to sampling disruptions during the government shutdown. "It's just one data point, I want to observe for a while longer," she said, "Fortunately, we have plenty of time to observe overall developments before our next meeting." Hammack pointed out that inflation has been hovering around 3% for most of the past year and a half, with rising input costs for businesses that could lead to price increases. She said this reinforces the need for caution. Following the Fed's rate cut in December, Hammack said she is more inclined towards maintaining a "slightly tight" level of rates.