Cleveland Fed President Hammack cautious about lowering interest rates while inflation remains a concern, diverging from market excitement following Chair Powell’s speech hinting at possible cuts. She believes maintaining a slightly restrictive policy is necessary to control inflation and anticipates being a voting member in 2026.

Hammack’s view on the “neutral” interest rate differs from other Fed officials, emphasizing the need to keep a restrictive stance to bring inflation back to target. She expresses concern that accommodation could reignite inflationary pressures. The Fed has maintained rates between 4.25%-4.5% since December 2024, with futures traders predicting a 90% chance of a September cut.

Kansas City Fed President Schmid echoes skepticism about cutting rates, aligning with Hammack’s cautious approach. Schmid, an FOMC voter this year, shares concerns about inflation and will not vote again until 2028. Both officials question the need for cuts despite market expectations following Powell’s remarks.

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