Harker, Federal Reserve: There’s No Urgent Need for Rate Cuts; Conservation is the Best Strategy.

Cailian Press, July 15th (Editor: Niu Zhanlin)
On Monday, local time, Cleveland Fed President Bess Hamerk stated that given the current high inflation and the uncertainty of Trump’s tariffs impacting prices, she believes there is no immediate need for a rate cut.
During an interview with the media, Hamerk said, “I think the current interest rates are very close to what we call the neutral rate level. I see a resilient economy, a well-functioning economy. I don’t think it’s necessary to cut rates unless the labor market shows significant weakness.”
Hamerk views the current inflation rate still above the Federal Reserve’s 2% target as the main reason not to consider cutting rates at present. “Inflation has fallen from over 7% during the peak of the pandemic to below 3%. However, it has been hovering around 3% for some time now, so I believe it’s important to wait and see how all the new policies announced will affect inflation.”
Regarding the FOMC meeting scheduled for July 29th to 30th, Hamerk commented, “I always remain open-minded during each meeting, waiting to see what economic data will tell us and the direction of discussion.”
She added, “But based on my current observations, we have reached our employment goals but not our inflation goals. Therefore, I think it’s necessary to continue maintaining restrictive monetary policy to ensure we bring inflation down to the 2% target.”
Most recent speeches by most Federal Reserve officials seem to suggest that the federal funds target rate range will remain unchanged at 4.25% to 4.5% by the end of this month. At the June meeting, Fed officials had projected that there might be two rate cuts later this year, while investors generally expect the Fed to start cutting rates at its September meeting.
However, a few Fed officials are willing to cut rates earlier, believing that Trump’s constantly changing import tariff policies will have a one-time impact on prices, thus rendering such impacts negligible.
Federal Reserve Board member Christopher Wall last week said, “Our monetary policy may have been too tight, considering the possibility of cutting rates in July.” He also emphasized that his view on interest rates “is unrelated to politics.”
Despite Trump continuously pressuring the Fed to cut rates quickly, Fed officials have so far focused on the economic data itself.
Recently, when asked about whether he would fire Powell, Trump said there were no plans, but he also once again described Powell’s work as “very poor.”
Hamerk stressed in an interview that the impact of tariffs has not yet fully emerged. She mentioned, “At present, the best strategy seems to be to wait and see because we still do not know how much these tariffs will ultimately impact the economy.”