Fed’s Hammack is inflation-wary and prefers holding rates steady into the spring

Subscribe to enjoy similar stories. Cleveland Fed President Beth Hammack said she doesn’t see any need to change interest rates for several months after the central bank cut rates at its last three meetings.

Hammack has opposed recent rate cuts because she is more worried about elevated inflation than the potential labor-market fragility that prompted officials to lower rates by a cumulative 0.75-point over the past several months. Hammack wasn’t a voting member on the rate-setting committee this year but will become a voter next year.

“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," she said in an interview Thursday with The Wall Street Journal’s “Take On the Week" podcast. Hammack said a favorable inflation reading for November released last week likely understated 12-month price growth due to data-collection distortions created by the government shutdown in October and the first half of November.

While the Bureau of Labor Statistics reported that the consumer-price index was up 2.7% from a year earlier in November, estimates that adjusted for the data-measurement difficulties “puts it closer" to the 2.9% or 3.0% figure that forecasters had broadly anticipated, she said. “While it’s great to get this official BLS data back, I do take it with a grain of salt," she said.

Hammack’s concern about lowering interest rates centers on her view that the so-called neutral level—which neither spurs nor slows the economy—is higher than widely believed and that the economy is primed for solid growth next year. The neutral rate can’t be directly observed, though it can be inferred