It’s no secret that Cleveland Fed President Beth Hammack has emerged as perhaps the most hawkish member of the US Federal Reserve since her appointment in 2024 after a career at Goldman Sachs.
Next year, however, she will take a more prominent position to make these points. The Federal Open Market Committee (FOMC) of the Fed sets interest rate policy. Its twelve voting members include four of the Fed’s eleven district presidents who serve rotating one-year terms. In 2026, Cleveland Fed Chief Hammack will join this voting group.
“My base case is that we can stay here [with rates] for a while until we get clearer evidence that either inflation is returning to target or employment is weakening more noticeably,” Hammack told the WSJ over the weekend.
“I take it with a grain of salt,” Hammack said of last week’s November consumer price report, which showed a shocking drop in the headline inflation rate from 3.1% to 2.7%, with a similar drop for the underlying rate.
Hammack blamed the data distortions on last fall’s government shutdown, and his own calculations put the rate closer to the 2.9% or 3.0% that economists had previously predicted.
All things being equal, looser monetary policy from central banks is seen as beneficial for risky assets like stocks, commodities and bitcoin. . While that has surely been the case this year for stocks and commodities like gold and silver — all of which are at or near record highs — bitcoin has struggled, beginning a slide from its own all-time high shortly after the Fed’s first rate cut in September.
A big break with Waller
Among the finalists chosen by President Trump for the next Fed chairman is current Fed Governor Chris Waller.
Waller said three days ago that he judges the current 3.5% to 3.75% level of the federal funds rate range to be 50 to 100 basis points above the neutral level, meaning that Fed policy remains quite restrictive.
Hammack told the WSJ, however, that the federal funds range today is “a little bit below” the neutral rate, meaning she thinks the current policy is at least somewhat stimulative.
This is an extremely wide gap between two of the key policymakers in 2026. Regardless of where rates move in 2026, there will certainly be some dissent on what is typically a unanimous or near-unanimous vote. Whoever becomes Fed chairman may struggle to muster the seven votes needed at each meeting to set policy.
