Federal Reserve Bank of Cleveland President Beth Hammack said she saw no need to change U.S. interest rates for months ahead after the central bank cut borrowing costs at its last three meetings, the Wall Street Journal reported on Sunday.
Hammack opposed recent rate cuts as she is more worried about elevated inflation than the potential labor-market fragility that prompted officials to lower rates by a cumulative 75 basis points over the past few months, the report added.
Hammack told the Journal that the Fed didn’t need to change its benchmark interest rate, currently in a range between 3.5 percent and 3.75 percent, at least until the spring.
By then, Hammack said, it would be able to better assess whether recent goods price inflation was receding as U.S. President Donald Trump’s tariffs are more fully digested through the supply chain, the report said.
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Hammack said that November’s consumer price index of 2.7 percent probably understated 12-month price growth due to data distortions, the report added.
“My base case is that we can stay here for some period of time, until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially,” Hammack told the Journal in a podcast interview recorded on Thursday, citing inflation concerns.
Speaking at an event in Cincinnati earlier this month, Hammack said she wanted to focus on high inflation and that she would prefer monetary policy to be tighter.
Hammack said the current policy rate was right, around a neutral level, but would prefer a slightly more restrictive stance to help put more pressure on inflation.
Hammack will be a voting member of the FOMC next year, which oversees important decisions regarding monetary policy and interest rates.
Reporting by Abu Sultan in Bengaluru; Editing by Andrew Heavens, Ros Russell and Gareth Jones
U.S. inflation rose 3% in September compared to a year ago, according to the Bureau of Labor Statistics’ latest data. The report shows food items like instant coffee and beef are getting pricier. Instant coffee prices in September were about 22% higher than last year. Prices went up by 0.5% from August to September. Roasted coffee drinkers, however, saw slight relief as prices dropped 0.6%. The Consumer Price Index, released by the BLS, is a common measure of inflation, as it shows the change over time in the prices consumers pay for goods and services. Inflation increased slightly by 0.3% from August to September, coming in lower than economists had predicted.Overall, meat prices saw a monthly increase of 1.6%. The average price for ground beef reached $6.32 per pound, up 12.9% from the year before.The release of the September report was delayed due to the government shutdown and would normally have been released on Oct. 15. It is the only economic data the BLS has released amid the shutdown and is used by the Social Security Administration to calculate next year’s annual cost-of-living adjustment for benefits.The White House on Friday said it’s unlikely the BLS will release October’s CPI because of the shutdown. Some grocery items, like eggs and lettuce, saw a decrease in prices. Click on the grocery items below to add them to your cart and see whether the total cost of your list has gone up or down. The total cost is based on the average CPI prices from September 2024 to September 2025. PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiPiFmdW5jdGlvbigpeyJ1c2Ugc3RyaWN0Ijt3aW5kb3cuYWRkRXZlbnRMaXN0ZW5lcigibWVzc2FnZSIsKGZ1bmN0aW9uKGUpe2lmKHZvaWQgMCE9PWUuZGF0YVsiZGF0YXdyYXBwZXItaGVpZ2h0Il0pe3ZhciB0PWRvY3VtZW50LnF1ZXJ5U2VsZWN0b3JBbGwoImlmcmFtZSIpO2Zvcih2YXIgYSBpbiBlLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdKWZvcih2YXIgcj0wO3I8dC5sZW5ndGg7cisrKXtpZih0W3JdLmNvbnRlbnRXaW5kb3c9PT1lLnNvdXJjZSl0W3JdLnN0eWxlLmhlaWdodD1lLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdW2FdKyJweCJ9fX0pKX0oKTs8L3NjcmlwdD4=
The report shows food items like instant coffee and beef are getting pricier. Instant coffee prices in September were about 22% higher than last year. Prices went up by 0.5% from August to September. Roasted coffee drinkers, however, saw slight relief as prices dropped 0.6%.
The Consumer Price Index, released by the BLS, is a common measure of inflation, as it shows the change over time in the prices consumers pay for goods and services. Inflation increased slightly by 0.3% from August to September, coming in lower than economists had predicted.
Overall, meat prices saw a monthly increase of 1.6%. The average price for ground beef reached $6.32 per pound, up 12.9% from the year before.
The release of the September report was delayed due to the government shutdown and would normally have been released on Oct. 15. It is the only economic data the BLS has released amid the shutdown and is used by the Social Security Administration to calculate next year’s annual cost-of-living adjustment for benefits.
The White House on Friday said it’s unlikely the BLS will release October’s CPI because of the shutdown.
Some grocery items, like eggs and lettuce, saw a decrease in prices.
Click on the grocery items below to add them to your cart and see whether the total cost of your list has gone up or down. The total cost is based on the average CPI prices from September 2024 to September 2025.
The Federal Reserve’s goal is to get the inflation rate at least near 2% before it begins cutting interest rates.
That’s a formal target backed by written policy, but it’s also the source of growing liberal discontent serving as another form of political pressure on Fed Chair Jerome Powell as he tries to navigate a white-hot election year.
Some on the left want that number to be higher. Some would prefer the Fed add a second target focused on the labor market. And several Democrats used public hearings this past week with Powell to question the target’s origins and why it has so much importance inside the central bank.
“It seems to come from Auckland and from the 1980s” a somewhat disbelieving Rep. Brad Sherman said Wednesday when it was his turn to question Powell.
The liberal stalwart from California was right. The path to 2% began with an off-the-cuff comment in New Zealand in 1988.
The Fed publicly adopted the standard 24 years later, in 2012, in a process that was met with discomfort from the left side of the political spectrum largely because of the lack of a parallel labor market target.
Senator Sherrod Brown, chairman of the Senate Banking Committee, underlined this dynamic Thursday when he suggested Powell move quickly to cut rates “to prevent workers from losing their jobs” and added that “this town too often seems to forget that maximum employment is part of the Fed’s dual mandate.”
The Fed doesn’t have a numeric labor target even though its dual mandate requires it to aim for both stable prices and maximum employment.
Its inflation target is key because of how rate cuts are decided. Powell and other Fed officials have made it clear they won’t start lowering the benchmark rate from its 22-year high until they are confident inflation is moving down “sustainably” to 2%.
And Powell strongly signaled this week that the 2% inflation target isn’t going anywhere. He mentioned it seven different times within the span of his five-minute-long opening remarks before lawmakers on both Wednesday and Thursday.
He also acknowledged its Kiwi origins in response to Sherman’s questioning but added that “2% has become the global standard, it’s a pretty durable standard.” He reinforced his belief that it wouldn’t be a problem for the US to achieve the 2% level in the months ahead.
“People are always talking about this,” said Preston Mui, who is with a labor market-focused group called Employ America. Changing the target by moving it even higher to 3% “is probably not something that’s politically in the cards for the Fed at all right now.”
But talking about the number has nonetheless “caused a lot of headaches for Powell over the last two to three years,” Mui added.
How the Fed got here
The path to the Fed’s 2% inflation target was a winding one that began with an interview that is now infamous in central banking circles.
Don Brash, who was governor of New Zealand’s Reserve Bank, offered an off-the-cuff comment in 1988 that he wanted an inflation rate between 0 and 1%. That set off a policy-making process and led his nation to adopt a formal 2% target soon thereafter.
Other central banks followed and the moves were criticized from some quarters as being too inflation-focused.
Perhaps the most colorful takedown came from Mervyn King, a British economist who served as governor of the Bank of England. He said in 1997 that he worried a hyper-focus on price targets would lead to central bankers becoming “inflation nutters.”
Don Brash, then the governor of the Reserve Bank Of New Zealand, during a press conference. (Robert Patterson/Getty Images) (Robert Patterson via Getty Images)
The Federal Reserve, under Alan Greenspan at the time, was resistant to a public embrace of the idea but debated it throughout the 1990s and early 2000s.
“If you read FOMC transcripts around inflation targeting it’s a concern,” said Federal Reserve historian Sarah Binder of political considerations in a recent interview.
There was resistance to implementing it during a 2008 downturn, with Ben Bernanke in charge. There was concern among Fed governors that “we’ve got to be worried about pushback from Democrats,” Binder said.
But by 2012, with a recession in the rearview mirror and Bernanke in his second term as chair, the Fed pivoted and a 2% target was publicly adopted.
Bernanke argued in his memoir that a 2% target increases business and consumer confidence and therefore gives the bank more flexibility to address both sides of its dual mandate.
It’s an argument that is still used today, with an explainer on the Fed’s website saying the 2% target “is most consistent with the Federal Reserve’s mandate for maximum employment and price stability.”
But many on the left were never fully on board. Bernanke acknowledged in his memoir that a main liberal voice of that era — Rep. Barney Frank of Massachusetts — brought up the lack of parallel labor market target and “wasn’t completely comfortable” with the policy even if he went along with it in the end.
Rakeen Mabud, the chief economist at the left-leaning group Groundwork Collaborative, put a finer point on it, saying the target “codifies the fact that inflation is just more important to the Fed than unemployment is.”
The ongoing critique is further contextualized by a 2020 move at the Fed to adopt a flexible average inflation targeting framework. In effect, the change made 2% into a less rigid target by allowing the Fed to look at 2% as an average and allows inflation to run slightly hotter for stretches.
The policy will be under review, Powell said this week, beginning later this year and through the end of 2025.
Why it won’t be so easy to change
The 2% target could grow as an issue in the months ahead, with many Democrats continuing to call for rate cuts even as forecasts have dropped throughout the early months of 2024. Some in the financial world are even predicting zero cuts all year.
“Interest rates are too damn high,” Congresswoman Ayanna Pressley of Massachusetts told Powell.
Another issue for the left is that simply adding a corollary target focused on the unemployment rate — which ticked up to 3.9% in the February jobs report — is not necessarily as easy as it might sound.
Mui, the senior economist at Employ America, said his group is focused on more nuanced measures like the prime age employment rate — the number of younger people working against their overall population — or wage growth or quit rates or overall labor force participation.
“I think if there was this rigid commitment to defining an unemployment target, there’s actually a risk [in some scenarios] that it actually doesn’t pay enough attention to that side of their mandate,” he says.
Ben Werschkul is Washington correspondent for Yahoo Finance.
President Joe Biden and Democrats cannot win the debate over the economy without fundamentally reframing the terms of the choice they are offering voters, an extensive new research study by one of the party’s prominent electoral-strategy groups has concluded.
The study, scheduled to be released today, seeks to mitigate one of the party’s most glaring vulnerabilities heading into the 2024 election: the consistent finding in surveys that when it comes to managing the national economy or addressing inflation, significantly more voters express confidence in Republicans than in Democrats.
To close that gap, the study argues, Biden and Democrats must shift the debate from which party is best equipped to grow the overall economy to which side can help families achieve what the report calls a “better life.” The study argues that Democrats can win that argument with a three-pronged message centered on: delivering tangible kitchen-table economic benefits (such as increased federal subsidies for buying health insurance), confronting powerful special interests (such as major corporations), and pledging to protect key personal liberties and freedoms, led by the right to legal abortion.
The study was conducted by Way to Win, a group that provides funding for candidates and organizations focused on mobilizing voters of color, in conjunction with Anat Shenker-Osorio, a message consultant for progressive candidates and causes. Last year, Way to Win was among the top advocates pushing the party to stress a message of protecting personal freedoms and democracy—an approach that helped Democrats overperform expectations despite widespread discontent about the economy.
Reversing the advantage Donald Trump and the GOP have on the economy will require Democrats to highlight “the tangible improvements their policies have made in people’s lives, in lieu of speaking of abstract economic gains, as well as touting their future agenda of expanding on these gains, taking on corporate greed and the MAGA Republicans who aim to rule only for the wealthy few,” concludes a memo summarizing the research that was provided exclusively to The Atlantic.
Based on months of polls, focus groups, and other public-opinion research, the study comes amid simmering Democratic anxieties over national and swing-state surveys showing Trump leading Biden. Especially frustrating for the White House and other Democrats has been the persistence and pervasiveness of negative public attitudes about the economy, despite robust economic growth, low unemployment, and a huge reduction in the inflation rate over the past year. Democrats were particularly unnerved by a recent survey from Democracy Corps, a group founded by the longtime party strategists James Carville and Stanley B. Greenberg, that found that voters in the key swing states gave Trump a retrospective job-approval rating for his performance as president nearly 10 percentage points higher than what they give Biden for his current performance.
Biden has spent months trying to highlight positive trends in the economy by describing them under the rubric of “Bidenomics.” But the Way to Win study, like the Democracy Corps research, argues that it is counterproductive for the administration to try to convince voters that inflation is abating or that the economy is improving while so many are struggling to make ends meet. Telling voters that “inflation is going down [produced a] backlash” in the research, Jenifer Fernandez Ancona, Way to Win’s senior vice president, told me: “Their experience is that it’s up. If you make an overarching statement that things are getting better, it rubs people the wrong way.”
Probably the key insight in the report is the contention that it’s a mistake for Democrats to focus the 2024 debate on any of the broad national trends in the economy, including those that have been positive under Biden, such as job growth.
For many years, the report argues, voters have been inclined to believe that Republicans are better than Democrats at managing the overall economy—an advantage that may be especially pronounced for Trump, a former business mogul, if he’s the GOP nominee. But, the study found, swing voters, as well as the irregular voters the party needs to turn out in 2024, give Democrats an edge on which party can best deliver for “you and your family’s economic well-being.”
“If the argument is who [handles] the economy best, even though it’s not true in any sense, that’s their brand advantage,” Shenker-Osorio told me. “If the question is who is going to create the best future for your family, that is a Democratic-brand advantage. That is a story we can tell. It’s a credible story, and it’s a story that people care more about.”
To shift the debate into this more favorable terrain, the report argues, Biden and other Democrats must simultaneously reorient their economic arguments in opposite directions. The group argues that Democrats must narrow their focus by talking less about macroeconomic trends and more about specific policies they have enacted to help families make ends meet. That includes policies that Biden has passed to lower prescription-drug and utility costs, and policies he could promote in a second term, such as restoring the expanded child tax credit that Democratic Senator Joe Manchin of West Virginia stripped from the Inflation Reduction Act last year.
“Among both swing voters and surge voters, folks are moved more by talking about tangible gains than by talking about growing the economy,” Shenker-Osario said.
Simultaneously, the report argues that Democrats must link their economic agenda to a broader promise to defend voters against an array of forces threatening their ability to succeed. In its research, the group found that the strongest case for Democrats blended pledges to deliver concrete economic benefits with promises to defend fundamental rights and stand up to big, wealthy corporations.
Across all of these fronts, Fernandez Ancona argues, the key for Democrats is not just to warn about what a second Trump term could mean but to give voters a positive vision that emphasizes their success at stopping him and the prospect that reelecting Biden could deliver measurable benefits. “We really believe we can’t just rely on telling people the bad things,” Fernandez Ancona said.
Key results in the 2022 election offer Democrats some reason for optimism that the approach urged by Way to Win can succeed. In the five swing states most likely to decide the 2024 presidential race, Democrats won seven of the nine Senate and gubernatorial races in 2022, primarily around variations on the themes that Way to Win wants the party to stress next year.
The range of problems confronting Biden, such as doubts about his age and capacity, can’t all be resolved by recalibrating his message. Fernandez Ancona doesn’t pretend otherwise. But she argues that a more precisely targeted message will provide Biden the best chance of maximizing his support whatever the background environment looks like next year. “We can’t control what conditions are,” she told me. “Messaging can’t solve all problems. But it does do something to paint the path forward and make sure that voters go into the booth knowing what the stakes are.”
With Trump looming as the likely GOP nominee, Democratic strategists at this point may have greater consensus about the stakes in 2024 than the path forward for the party. The sheer proliferation of studies proposing a new approach for Biden may be the most telling measure of how much more difficult this election looks than Democrats once anticipated.
