December in Jeopardy? Another Fed Official Voices Concern: Unsure About Further Rate Cuts, More Worried About Inflation!

On Thursday Eastern Time, Cleveland Fed President Beth Hammack once again expressed concerns about inflation, stating that it remains unclear whether the central bank should cut interest rates further.

"Following last week's meeting, I believe monetary policy has little, if any, restrictive effect, and it is not obvious to me that monetary policy should do more at this time. But the future is inherently uncertain, and I will be closely monitoring developments," she added.

This week, amid the US federal government shutdown and lack of data, Chicago Fed President Austan Goolsbee, Fed Governor Lisa Cook, and San Francisco Fed President Mary Daly all stated that no decision has been made yet on whether to cut rates again in December.

Last week, the Fed lowered the federal funds rate target range by 25 basis points to 3.75%-4.00%, as expected. This marks the Fed's second rate cut in 2025 and the second consecutive cut since September this year. For the first eight months of the year, the Fed held rates steady, awaiting assessments of the economic impact of tariffs and other policy adjustments.

She further pointed out that compared to the Fed's 2% inflation target, the current inflation rate is too high and moving in the wrong direction. Hammack believes the Fed is a full percentage point off target on inflation and is unlikely to return to the target level for several years, while the unemployment rate is less concerning.

Regarding the labor market, Hammack expects the unemployment rate to rise slightly starting next year before declining over the next two to three years. She stated that a range of other indicators, including consumer spending and GDP growth, suggest the overall economy remains healthy, reducing the likelihood of a downturn in the job market.

"At this point, I don't think monetary policy can do more without risking going over a cliff," she added.