Two newly appointed voting members of the Federal Reserve indicated on Tuesday that they currently prefer keeping interest rates unchanged due to concerns about the inflation outlook, opting to monitor economic and price trends further. Cleveland Fed President Beth Hammack, speaking at the Ohio Bankers League Economic Summit in Columbus, Ohio, stated that she views current monetary policy as being in a "good place," allowing for a pause to assess incoming data and determine if and how further policy adjustments might be needed. She explicitly stated that, based on her projections, the Fed could maintain the current interest rate level for a considerable period.

Hammack pointed out that inflation remains elevated and has largely moved sideways over the past two-plus years. She believes there is a risk that inflation will stay near 3% this year, a pattern that has characterized the last two years. She emphasized that it would be difficult to support further policy easing until clear and sustained evidence of declining prices emerges. Rather than making fine-tuning adjustments to rates, she expressed a preference for patience, stating a willingness to "choose patience, even if it means moving slower," while evaluating the effects of last autumn's three rate cuts and the performance of economic growth.

In her view, the current federal funds rate is roughly near a "neutral" level, meaning it is not significantly restraining economic activity. She also noted that the risks to the future path of interest rates are roughly balanced between moving higher or lower. While she expects inflation may moderate somewhat this year, she remains watchful of the impact of tariffs on prices. She indicated that numerous businesses have reported that increased tariffs have raised their costs, with some already passing these costs on to consumers and others signaling potential future price hikes. Additionally, rising electricity and health insurance costs are also exerting upward pressure on inflation.

Another new voting member, Dallas Fed President Lorie Logan, speaking in Austin, Texas, also expressed growing concern over inflation's persistent elevation. Logan suggested that the three rate cuts implemented last year by the central bank to prevent a deterioration in the labor market had objectively increased the risk of an inflation rebound. She stated that she is currently more worried about inflation failing to recede than about the economy overheating.

Logan indicated that data over the coming months will test whether inflation is moving back towards the Fed's 2% target and whether the labor market can maintain its stability. If inflation does decline and the job market remains resilient, it would suggest that the current policy stance is appropriate, negating the need for further rate cuts to fulfill the Fed's dual mandate. She added that if inflation falls while the labor market cools further, then another rate cut "could become appropriate."

Although Logan anticipates some progress on inflation this year as the effects of tariffs that previously boosted goods prices fade, she admitted she is not yet fully convinced that inflation will smoothly return to the 2% target. Citing anecdotal evidence from Fed surveys, she noted that tariff-related price pass-through to end consumers is still expected to continue through this year. Furthermore, she said she has not yet seen clear signs of further cooling in core non-housing services inflation, a category that has generally moved sideways throughout 2025.

Regarding employment, Hammack stated that the U.S. labor market appears to have stabilized. She noted that the unemployment rate is currently 4.4%, similar to its level last September, indicating a rough balance between job seekers and open positions. Initial jobless claims remain low, and while announcements of large-scale layoffs by companies are in line with historical averages, some firms have indeed announced workforce reduction plans. Hammack expects economic growth to accelerate this year, supported by previous rate cuts and fiscal support, which should prompt more businesses to initiate investment projects, leading to improved employment conditions and a gradual reduction in the unemployment rate over the year.

Logan believes that the downside risks to the labor market have diminished significantly. She pointed out that although job growth slowed last year, the monthly pace of job gains since mid-2025 has been sufficient to keep the unemployment rate stable. She expects robust consumer spending and business investment to continue supporting the job market.