U.S. Cleveland Fed President Says Both Easing and Tightening Are Possible

New York, The Financial News – Correspondent Lee Byung-chul.The Federal Reserve System (Fed) is increasingly likely to keep its benchmark interest rate on hold for the time being. Policymakers see it as difficult to set a clear direction for monetary policy, as inflationary pressure from the 2026 Iran War and early signs of a slowdown in employment are emerging at the same time.
Beth Hammack, president of the Federal Reserve Bank of Cleveland, said in an interview with CNBC on the 15th local time, "Keeping rates unchanged for a considerable period is our baseline scenario," adding, "This is a moment when we need to be patient and watch the data."
Hammack noted in particular that there are opposing risks surrounding the future path of interest rates. She said, "Depending on the data, we could move in a more accommodative direction or a more restrictive one," and added, "The risks are open in both directions."
After cutting rates three times in the second half of last year, the Fed has kept them unchanged at its first two meetings this year. The current policy rate stands in a range of 3.5% to 3.75%, which Hammack described as "an appropriate level."
Inflation remains the key concern. The 2026 Iran War and the impact of tariffs have pushed up energy and supply chain costs again, raising the possibility that inflation could reaccelerate.
Hammack pointed out, "A series of supply shocks makes it harder for monetary policy to respond," and said, "In the past, we could treat them as temporary shocks and look through them, but with inflation already high, our approach may have to change."
The labor market is also in a delicate balance. She said the job market is "largely in balance," but characterized it as "an unusual structure in which job growth is slowing while labor supply is increasing only gradually."
Within the Fed, differences of opinion over the direction of interest rates persist. At the March meeting, policymakers indicated the possibility of one rate cut this year, but reports suggest there were significant divisions among committee members.
Markets likewise lack conviction about the outlook. According to the Chicago Mercantile Exchange (CME), current pricing in financial markets implies roughly a 30% chance of a rate cut this year.


pride@fnnews.com Reporter Lee Byung-chul Reporter