Cleveland Federal Reserve President Beth Hammack expects interest rates to remain on hold for an extended period of time as the economy grapples with the economic impact of the U.S.-Iran war.
Claim 55% Off TipRanks
Forget margin or options. Here's how the pros trade QQQ“Right now, my base case is that we’ll be on hold for quite some time around this level, which is pretty close to what I think of as the natural rate of interest,” Hammack told NPR on Thursday.
Fed Seen Holding Rates Through Year End
Hammack noted that the Fed has viewed previous oil shocks arising from conflicts as one-off events. However, she worries that higher energy prices could further raise inflation, which has remained above the Fed’s target of 2% for five years.
Hammack voted to maintain rates at the last Federal Open Market Committee (FOMC) in April. Still, she dissented over language in the central bank’s statement that signaled rate cuts in the near term. “I thought that was a little bit misleading, just given my view of where the economy is,” she said.
Rates are likely to remain on hold for the rest of the year with 71.8% odds, according to the CME FedWatch tool.