Cleveland Fed President Beth Hammack Talks Interest Rates, Jobs Report

Summary

Bloomberg Talks: Cleveland Fed President Beth Hammack Talks Interest Rates, Jobs Report

Date: March 6, 2026
Host: Bloomberg
Guest: Beth Hammack, President of the Federal Reserve Bank of Cleveland

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Episode Overview

This episode features an in-depth interview with Beth Hammack, President of the Cleveland Federal Reserve, focusing on the current state of the U.S. economy, interest rate policy, and the implications of recent jobs reports and inflation data. Hammack discusses the Fed’s balancing act between inflation control and supporting the labor market, the incoming potential Fed chair, and the considerations around the Federal Reserve’s balance sheet and monetary policy strategy.

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Key Discussion Points and Insights

The Labor Market & Jobs Report

• The latest jobs report showed disappointing numbers, mainly due to increased unemployment.

• Hammack urges caution in over-interpreting single reports but acknowledges the disappointment.

• The outlook from businesses in her district remains broadly optimistic; many are investing and see robust demand.

• The labor market is described as “stabilizing,” with unemployment hovering around 4.3-4.4%.

  Quote:

  “Certainly this number was a disappointment, mostly because it means that there are more Americans who aren’t working… We've had a labor market that I would characterize as stabilizing.”
  — Beth Hammack, 01:01

Inflation & Monetary Policy

• Despite the healthy economic outlook, inflation remains above the Fed’s 2% target, stuck around 3% with “virtually no progress over the past two years.”

• Hammack sees "two-sided risks" to rates, meaning that the Fed must remain vigilant on both inflation and unemployment fronts.

• Believes current monetary policy is “around neutral,” not overly restrictive.

  Quote:

  “We need to make sure that we're maintaining a balance of policy that's going to help bring inflation back down to target while still supporting the labor market.”
  — Beth Hammack, 01:38

  Quote:

  “I think we're right around neutral… they're [businesses] still willing to make investments, they're taking out loans… all of that says to me that we are around that neutral level.”
  — Beth Hammack, 02:37

Interest Rate Outlook

• Hammack suggests the Federal Reserve could “be on hold for quite some time” instead of making hasty policy adjustments.

  Quote:

  “Yeah, I’m just one person, but as I see it, I think we could be on hold for quite some time.”
  — Beth Hammack, 03:23

Upcoming Fed Leadership Transition

• Discusses the imminent appointment of a new Fed chair (potentially Kevin Warsh).

• Emphasizes the collaborative nature of the FOMC: “one guy can’t do it himself… 19 people on the committee.”

• Anticipates robust discussions and fresh perspectives under new leadership.

  Quote:

  “I think you saw the transition from Greenspan to Bernanke to Yellen to Powell. And I think this will be another transition and the committee will adapt… I have every confidence that, that Kevin, if he assumes the job, is going to do his absolute best for the American public like all the rest of the 18 of us do around that table.”
  — Beth Hammack, 03:54

Fed Balance Sheet Debate

• Hammack welcomes discussion about reducing the Fed’s balance sheet and recognizes that debate is healthy for policy.

• Explains the technical decision between an “ample reserves regime” versus a “scarce reserves regime,” and how that would affect the balance sheet makeup (Treasuries vs. repos).

• Notes the importance of adjusting the balance sheet “slowly” and “thoughtfully.”

  Quote:

  “Typically, we don't do things very rapidly. We take our time and we make sure that we're thoughtful. The magnitude of the decisions that we're making are significantly greater than what I did in my previous life. So it's appropriate that we move a lot more slowly.”
  — Beth Hammack, 04:42

  Quote:

  “If the banks demand a certain amount of reserves, we have to supply those reserves. Right now we’re doing that by holding Treasuries on our balance sheet… The form in which we're supplying them could change.”
  — Beth Hammack, 06:02

Business Sentiment in the Cleveland District

• Reports from regional business leaders show a shift: companies are no longer in a holding pattern, but actively hiring and investing.

• Major constraint: difficulty in finding skilled labor, especially tradespeople.

  Quote:

  “Companies are no longer sitting on their hands… If they could find 10 workers, they’d hire 10 workers because they’re seeing the demand and they want to be able to meet that.”
  — Beth Hammack, 07:32

Pricing & Inflationary Pressures

• Persistent pricing pressures in the district, with notable input cost increases from energy and insurance.

• Businesses are facing margin pressure as producer prices rise faster than consumer prices (PPI vs. CPI).

• Many businesses are hesitant to raise prices further, concerned about impacting demand.

  Quote:

  “Producer prices are going up a lot more than the prices to consumers, which means that businesses are buffering that. That's eating into their margins. And one of the questions we continue to ask… is how long can that persist?”
  — Beth Hammack, 08:15

Risks from Geopolitics: War and Oil Prices

• Higher energy prices are influencing consumer outlook and sentiment.

• Hammack considers the “magnitude and persistence” of oil price increases as key factors; sees risks of both inflation and demand drop-off (“two-sided risks”).

• Cautious about the potential for stagflation, but the economy is described as being in "a reasonably good place."

  Quote:

  “There is evidence to show that [energy prices] can impact consumers’ outlook, their spending and their willingness to invest… What I'm going to be looking for is how, how big and for how long.”
  — Beth Hammack, 09:50

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Notable Quotes & Moments (with Timestamps)

• Disappointment on Jobs:
  “Certainly this number was a disappointment, mostly because it means that there are more Americans who aren’t working…”
  — Beth Hammack, 01:01

• Policy at ‘Neutral’:
  “I think we’re right around neutral… all of that says to me we are around that neutral level.”
  — Beth Hammack, 02:37

• On Rate Moves:
  “I think we could be on hold for quite some time.”
  — Beth Hammack, 03:23

• On New Leadership:
  “I have every confidence that, that Kevin, if he assumes the job, is going to do his absolute best for the American public...”
  — Beth Hammack, 03:54

• Balance Sheet Strategy:
  “But I'm excited to have these conversations. You know, one of the other things he's talked about is our communication strategy…”
  — Beth Hammack, 04:42

• Business Outlook:
  “Companies are no longer sitting on their hands…they had to keep operating their businesses.”
  — Beth Hammack, 07:32

• On Pricing Pressures:
  “Producer prices are going up a lot more than the prices to consumers, which means that businesses are buffering that...”
  — Beth Hammack, 08:15

• War & Oil Risk:
  “There is evidence to show that [energy prices] can impact consumers’ outlook, their spending and their willingness to invest…”
  — Beth Hammack, 09:50

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Timeline of Important Segments

• 00:37–01:38: Labor market, jobs report reaction & inflation challenges
• 02:19–03:23: Monetary policy stance & rate neutrality
• 03:33–04:42: FOMC dynamics and upcoming leadership change
• 04:42–07:14: Balance sheet policy: debates, implications, and mechanics
• 07:14–09:21: Regional business outlook, hiring, and inflation in the Cleveland district
• 09:21–10:33: Geopolitical risks, oil, and outlook for inflation and consumer sentiment

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Conclusion

Beth Hammack offers a measured, data-driven perspective on the Fed’s current policy dilemma: balancing inflation control with employment support in a persistently uncertain economic landscape. She underscores stability and continuity in policy, openness to rigorous debate on the Fed’s tools, and an awareness of both domestic and global risks that could shift the outlook. The tone remains pragmatic, cautious, and slightly optimistic, reflective of both the complexity and the resilience within the current economic environment.

Transcript

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Bloomberg Audio Studios Podcasts Radio News

[Bloomberg Host]

we'd like to welcome Beth Hammack to Bloomberg Television and Radio Worldwide. You just finished a panel. You made an address basically suggesting that risks are two sided. Now you've been on the side of inflation being the biggest concern. But then we got this jobs report today that sort of makes the case for some of the doves on the committee. What did you make of it?

[Beth Hammack]

Well, I try not to make too much of any one individual number and certainly this number was a disappointment, mostly because it means that there are more Americans who aren't working. That's what disappointed me in this report. We've seen the economy overall, it's been pretty healthy. It's been brightening. The outlook has been positive. When I'm out in the District talking with businesses, I hear them talking about their optimism and that they're looking to make more investments in their businesses and they think demand is going to be reasonably robust. But we've had a labor market that I would characterize a stabilizing. You know, it's been in that 4.3, 4.4 range for an unemployment rate perspective. Obviously the headline jobs number has been the piece that's been a little bit weaker. When I talked to you last, it was August, which was the first of those reports where we saw more, more softening in the labor market. But it does look like it's been stabilizing. And I think part of that is due to the accommodation that we put into the economy towards the end of last year. And now we have a lot of tailwinds, I think looking ahead in terms of the economy and in terms of growth. On the other side of our mandate, inflation has been above our target for five rates. We've made virtually no progress over the past two years. We're still right around 3% on inflation. And so we need to make sure that we're maintaining a balance of policy that's going to help bring inflation back down to target while still supporting the labor market. So when I look at things broadly, to me it seems like there are two sided risks to rates.

[Bloomberg Host]

Well, there is a question on Wall street that came out in the last minutes where it was suggested that some members of the Open Market Committee wanted to put the two sided risks in into the statement. At this point, is monetary policy tight enough to address the inflation side?

[Beth Hammack]

That's a great question. I think we're right around neutral. You know, there are a lot of different estimates of what that neutral rate is. To me, when I see the economy continuing to perform reasonably well, I take confidence that we're probably not being overly restrictive. When I talk to business leaders, they're still willing to make investments, they're taking out loans. The banks that I've talked to in the district see that their loan growth is, is improving. And so all of that says to me that we are around that neutral level and that we should stay at least around neutral to help make sure we're putting the right amount of pressure in bringing inflation back down to target.

[Bloomberg Host]

So we basically can look at the next meeting as kind of a wash. It's too early to make any decisions based on what's going on with the war. And as far as you're concerned, you don't need any more accommodation right now?

[Beth Hammack]

Yeah, I'm just one person, but as I see it, I think we could be on hold for quite some time.

[Bloomberg Host]

But as a voter, an important person, we're not going to diminish.

[Beth Hammack]

I think all 19 of us are important.

[Bloomberg Host]

So one of the things that's going to happen over the next few months is a new chair is going to come in. A lot of people talking about Kevin Warsh is going to lower interest rates, but one guy can't do it himself. It's as you say, 19 people on the committee. So how do you think that plays out with a new chair, you know, who's not Jay Powell anymore?

[Beth Hammack]

Well, I mean, there's been transitions in the chair of the committee since the, since the body was founded in 1913. And so there have been a number of evolutions. And I think you saw the transition from Greenspan to Bernanke to Yellen to Powell. And I think this will be another transition and the committee will adapt. And I'm excited to work with the new chair. I think that whoever walks into that role, the chair seat is a particularly influential seat. They historically have tried to bring the committee together, get a perspective on where people are. And I have every confidence that, that Kevin, if he assumes the job, is going to do his absolute best for the American public like all the rest of the 18 of us do around that table.

[Bloomberg Host]

Well, he's wanted to make some changes and one of them is a smaller balance sheet. This is kind of your area of going back to your days at Goldman Sachs. What do you think of that idea?

[Beth Hammack]

I think it's a. I think it's a discussion that we should have. I think there are lots of things that we've done for a long time. And one of the things I love about being on the committee and being part of the system is that we have really rigorous, really deep debates about what is the right thing to do, what's the best thing that we can do to support the economy. And so I think it's a fair conversation to say, should we have a balance sheet as large as it's been or should we look at reducing it? What are the pros and cons? What are the ramifications? Typically, we don't do things very rapidly. We take our time and we make sure that we're thoughtful. The magnitude of the decisions that we're making are significantly greater than what I did in my previous life. So it's appropriate that we move a lot more slowly. But I'm excited to have these conversations. You know, one of the other things he's talked about is our communication strategy. Do we have the right communication strategy? Should we be using more words in our statements or fewer words? Are the press conferences something? So I think there'll be a new leader coming in. Like in any organization that has a new leader, I'm sure will bring fresh ideas, fresh perspectives, and it'll spark a bunch of really good discussions.

[Bloomberg Host]

Well, from your old job perspective of looking at this whole system of the balance sheet and everything that's developed over the years since you went to interest on reserves, would it be very, very hard to change again, given the infrastructure that's arisen around this?

[Beth Hammack]

So I think when we talk about reducing the balance sheet, it's really about are we going to be an ample reserves regime or a scarce reserves regime? I think is really what the question is around. And obviously the details are going to matter on any particular proposal. But in order to maintain good rate control, if the banks demand a certain amount of reserves, we have to supply those reserves. Right now we're doing that by holding treasuries on our balance sheet. If we move to a scarce reserve reg, we would do that by engaging in open market operations. And so there'd be repos rather than Treasuries. Net net, the size of the balance sheet is still the same. It's just the form of those assets that's Different. The, the duration profile, the risk profile is slightly different depending on which format you have. And so I think it's a reasonable question to say, is it better to be in Treasuries? Would we rather be in repos? That's a discussion that we can have away from that. You know, the banks are going to demand what they want. From a reserve perspective. A lot of that is driven by our liquidity regulations, by their payment flows, and by just their willingness and their desire to have safe assets on their balance sheet. And so there are a number of factors at play that are going to drive that size of what they want those reserves to be. But the form in which we're supplying them could change.

[Bloomberg Host]

Let me go back to the making of monetary policy and ask you about when you go around the Cleveland district, what are you hearing from companies about their plans? We were told for a long time by all kinds of Fed officials and companies are. Are saying, we're sitting on our hands because we're waiting to see what's going to happen. Has that changed at all?

[Beth Hammack]

That's changed. Companies are no longer sitting on their hands. I think they recognize somewhere around last fall that we were living in a world of uncertainty and that was not going to change and they had to keep operating their businesses. So when I was out in Akron a few weeks ago, we were talking with some business leaders and they were talking about trying to go out and hire, you know, saying if they could find 10 workers, they'd hire 10 workers because they're seeing the demand and they want to be able to meet that. What I hear most often in the district is that it's hard to find skilled laborers and tradesmen, and that's been a real barrier to growth for a number of the companies in the 4th district.

[Bloomberg Host]

If they are considering raising prices, are we going to see more of that? We did see a big jump in goods prices in the last pie.

[Beth Hammack]

Yeah, it's, you know, the pricing pressures have been reasonably consistent. We talked about we've been closer to 3% than our objective of 2%. It's coming from a variety of sectors. You know, some of it is driven by energy costs, some of it is driven by. By insurance costs. I hear that very regularly when I'm out in the district with businesses that those two pricing pressures are really significant. You know, talking to a grocery, a grocer, they were talking about how their energy costs have been really elevated and they have to factor in how much that do they want to put into the food costs that they're selling things for. And so businesses are continuing to really deal with these pricing pressures. One of the things if you look at the data is you do see PPI significantly higher than cpi, right? So the producer prices are going up a lot more than the prices to consumers, which means that businesses are buffering that. That's eating into their margins. And one of the questions that we continue to ask businesses is how long can that persist? At what point will you need to pass on those pricing pressures? Right now they've been nervous to price on more because they're worried about the demand outlook and they don't feel that they necessarily have all the ability to price it on without impacting demand. But that's something that we'll be keeping a close eye on.

[Bloomberg Host]

What are you discerning from people in your district, both in the executive suite and then regular people about the war and the price rises which is going to be gasoline for most people in the short run because it could have an effect on consumer sentiment. Now we know they're not as related as they used to be, consumer sentiment and consumer spending. But do you worry that this could lead us to something like stagflation?

[Beth Hammack]

You know we run in Cleveland the Center for Inflation Research and our team has done a lot of work around what the impact of higher energy prices is on consumers. And there is evidence to show that it can impact consumers outlook, their spending and their willingness to invest. I think the economy right now is in a reasonably good place. But obviously all these developments, the macro developments bear watching. You know, the impact of oil prices, it's too soon to say. What I'm going to be looking for is how, how big and for how long. So the magnitude and persistence of any potential increase in oil prices, what's that going to mean? How long is that going to persist and how will that flow through? It could be that it puts more persistent inflationary pressure there, but it also could mean that there's a drop off in demand because of it as well. And so there really are two sided risks that are worth watching.

[Bloomberg Host]

Beth Hammock, thank you very much for joining us. The president of the Federal Reserve bank of Cleveland.

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