Cleveland Fed President also adopts a hawkish stance: There is no need to cut interest rates in the coming months, November CPI is underestimated

In 2026, FOMC voting member and President of the Cleveland Federal Reserve, Beth Hammack, joined the Federal Reserve's hawkish camp, clearly stating that there is no need to cut interest rates in the coming months and questioning the accuracy of the November inflation data. This stance further reinforces the signals from the Federal Reserve to pause the rate-cutting cycle, adding more uncertainty to next year's monetary policy path. According to a report by The Wall Street Journal, Hammack stated in an interview that the Federal Reserve does not need to change the current benchmark interest rate range of 3.5%-3.75% at least until spring next year. She had previously opposed recent rate cut decisions and is more concerned about persistent inflation rather than a weak labor market. Hammack's hawkish remarks echo the cautious stance of other Federal Reserve officials. New York Federal Reserve President John Williams also pointed out in an interview with CNBC last Friday that the Federal Reserve currently has no urgency to cut rates further, as previous rate cuts have positioned monetary policy favorably. Market expectations for Federal Reserve rate cuts in 2025 continue to cool, with traders anticipating a low probability of rate cuts in the first half of next year, and a roughly 50% chance of a rate cut in June. Doubts About CPI Data Accuracy Hammack expressed more concerns about the current inflation situation. She told The Wall Street Journal that the 2.7% year-on-year increase in the November CPI may underestimate the actual price increase due to data distortions. "My basic judgment is that we can maintain the current level for a while until we have clearer evidence showing that inflation is returning to target levels or there is more evident weakness in employment," Hammack stated in a podcast interview recorded on Thursday. The Federal Reserve's "third-in-command," Williams, also expressed concerns about data quality, noting that the November CPI report was distorted due to the government shutdown, but he also believes that core inflation is continuing to approach the 2% target. Preference for Tighter Policy Stance Hammack clearly expressed her preference for a tighter monetary policy. She stated at an event in Cincinnati earlier this month that she hopes to focus on the high inflation issue and leans towards implementing a tighter monetary policy. Although Hammack believes the current policy rate is at an appropriate level near neutral, she prefers to adopt a slightly more restrictive stance to exert greater pressure on inflation. As an official who opposed the Federal Reserve's decision to cut rates by a cumulative 75 basis points over the past few months, Hammack's concerns are primarily focused on persistent inflation rather than the potential weakness in the labor market that has prompted other officials to consider rate cuts. Hammack's hawkish stance is significant for monetary policy in 2026. She will become a voting member of the Federal Open Market Committee (FOMC) next year, able to directly participate in important monetary policy decisions such as interest rates. She stated that it will be necessary to wait until next spring to better assess whether recent commodity price inflation is easing, especially after President Trump's tariff policy has been more fully digested through the supply chain