Key Interest Rates Could Remain Unchanged For Extended Period, Says Fed’s Hammack: Report

• Under those circumstances, Hammack said that the rates could be “on hold for quite some time.” 
• She added that she believes “we are in a good position to keep the funds rate at this level and see how things play out.” 
• As per the report, Hammack said the economic outlook was optimistic but also noted that inflation remains “too high.”

Federal Reserve Bank of Cleveland President Beth Hammack reportedly said that the key interest rates in the U.S. could be on hold for an extended period as upcoming economic data is considered.

According to a report from Reuters, Hammack said on Tuesday in prepared comments for an event in the Ohio Bankers League in Columbus, Ohio, that the central bank is not in a hurry to alter interest rates this year as it sees a “cautiously optimistic” outlook for economic activity in the country.

Under those circumstances, Hammack said that the rates could be “on hold for quite some time,” adding that she believes “we are in a good position to keep the funds rate at this level and see how things play out.”

Last month, the Fed held benchmark interest rates steady at 3.50% - 3.75% in its first policy meeting of 2026, in line with market expectations as labor market data was encouraging and the unemployment rate was stabilizing. Hammack said she supported the central bank’s decision at the meeting.

Hammack’s Rationale

Hammack reportedly said that instead of focusing on fine tuning the interest rate, she would prefer to err on the side of patience as officials wait to see the impact of the recent rate reductions and watch how the economy performs, adding that “a steady funds rate would reflect positive economic developments.”

As per the report, Hammack said the economic outlook was optimistic but also noted that inflation remains “too high,” adding that it was important for price pressures to ease even as it looks likely for inflation to remain around 3% this year.

“Growth this year should get a boost from easier financial conditions, recent interest rate reductions, and fiscal support, among other factors,” Hammack reportedly said.

About employment, the Fed president said that the economy was in a ‘low-hire, low-fire’ period, indicated through official data as well as from businesses.

Economic Data

According to data from The Commerce Department released earlier on Tuesday, U.S. retail sales in December remained unchanged, coming in much weaker than expected as eight out of 13 categories posted declines, suggesting a slowdown in consumer spending as well as the economy in the upcoming year.

Meanwhile, U.S. citizens are expecting inflation to be lower in the near-term, according to a report from the Federal Reserve Bank of New York that was released on Monday. According to the latest Survey of Consumer Expectations (SCE), the NY Fed said inflation expectations one year from now stood at 3.1% in January compared with 3.4% in December, while at the three- and five-year-ahead horizons, expectations held steady at 3%.

The markets are looking forward to the January jobs data to be released on Wednesday and the next consumer price index report scheduled to be released on Friday.

On the markets’ front, U.S. equities were mixed on Tuesday. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was relatively flat, while the Invesco QQQ Trust ETF (QQQ) fell 0.09%, and the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.3%.

Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.37% at the time of writing.

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