By Michael S. Derby
May 7 (Reuters) – Federal Reserve Bank of Cleveland President Beth Hammack said in a radio interview on Thursday she expects the central bank to hold interest rates steady well into the future as it navigates a climate of considerable uncertainty.
“My outlook right now is that interest rates will be on hold for quite some time,” with the amount of time on hold not yet clear, Hammack said in an interview on the WOSU public radio station.
“Based on what I see right now, I see a lot of uncertainty in the economic outlook” and “I think our statement should have a pretty neutral stance about whether the next move is down or up or just on hold for a really long period of time,” she said.
Hammack dissented at the most recent Fed meeting about the ongoing inclusion of language in its statement implying the Fed’s next move would be a rate cut. The Fed held its interest rate target steady at between 3.5% and 3.75% and suggested that when it does change rates, the move will be to lower them.
A number of Fed officials joined with Hammack to take issue with that stance, leading to the largest number of dissenters at a Fed meeting since 1992.
Hammack noted in the radio interview that she supported holding rates steady then and downplayed the level of discord implied by the vote, saying there was more consensus over economic and policy views than it appears.
Hammack said the job market is relatively stable at the moment in a low-hire, low-fire equilibrium, but when it comes to inflation, “we have been missing our 2% objective for the past five years, and with the pressures that we see right now coming from the conflict in Iran, it could mean that those pricing pressures are going to be more persistent.”
Hammack also said in the interview that inflation expectations are largely anchored and that the banking system is doing well right now.
(Reporting by Michael S. Derby; Editing by Chizu Nomiyama and Andrea Ricci)
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