Two new voting members on the Federal Reserve this year said Tuesday they would prefer to hold rates steady for now because of concerns about inflation.
“I believe monetary policy is in a good place to stay on hold as we assess the incoming data and weigh if, and how, policy may need to adjust further,” Cleveland Fed president Beth Hammack said Tuesday at the Ohio Bankers League Economic Summit in Columbus, Ohio.
“Based on my forecast, we could be on hold for quite some time,” she said.
Hammack said inflation is still too high and has largely moved sideways for more than two years. She sees a risk that inflation could persist near 3% this year, as it has for the past two years.
Hammack said she needs to see decisive evidence that prices are coming down. And rather than try to “fine-tune” interest rates, Hammack said she’d prefer to “err on the side of patience” as the Fed assesses the impact of three rate cuts from last fall and economic growth.
Right now, she sees the Fed’s benchmark policy rate in the vicinity of neutral, meaning it’s not meaningfully restraining the economy.
Hammack said she sees the risks of a higher or lower path for the rates as about balanced.
While her outlook does anticipate some easing in inflation over the course of this year, Hammack said she is monitoring the impact of tariffs on prices. She said companies have told her increases in tariff rates have pushed up their costs, and while some businesses have already passed along those costs, others said more price increases are coming. Hammack also pointed to rising prices of electricity and health insurance.
“At this point, it’s too soon to say if these broad cost pressures have peaked,” she said.
Read more: How jobs, inflation, and the Fed are all related
‘Stubbornly high’ inflation
Elsewhere, Dallas Fed president Lorie Logan said she’s also more worried about inflation staying high, adding that the three rate cuts the central bank made last year to guard against a deterioration in the job market have increased the risk of inflation.
“Right now, I am more worried about inflation remaining stubbornly high,” Logan said in a speech in Austin, Texas.
“We will learn in coming months whether inflation is coming down to our target and whether the labor market will remain stable,” she said. “If so, this would tell me that our current policy stance is appropriate and no further rate cuts are needed to achieve our dual mandate goals.”
Logan added that if inflation comes down but the job market cools further, “cutting rates again could become appropriate.”
While Logan anticipates progress on inflation coming down this year as tariffs that have been pushing up the prices of goods begin to fade, she’s “not yet fully confident” that inflation is heading all the way back to the Fed’s 2% goal.
Logan said anecdotal evidence from Fed surveys suggests tariffs still need to fully work their way through prices this year. At the same time, she said there’s yet to be any evidence of further easing in “core” non-housing services inflation, which generally moved sideways in 2025.
A stabilizing job market?
On the job front, Hammack said the labor market appears to have stabilized.
With the unemployment rate at 4.4%, she noted it remains close to where it was last September and appears stable — that is, job seekers and job vacancies are balanced. She also noted initial claims for unemployment insurance have remained low and acknowledged that while companies’ notices of mass layoffs are in line with historical averages, some businesses have announced job cuts.
Hammack said she thinks economic growth will pick up this year thanks to recent rate cuts and fiscal support, which she expects will lead more businesses to move forward with projects and a stronger job market that will push down the unemployment rate over the course of the year.
On the other hand, Logan said she thinks the labor market appears to be stabilizing that and the “downside risks appear to have meaningfully dissipated.”
While payrolls slowed last year, Logan pointed out that since mid-2025, monthly job gains have remained around the level needed to keep the unemployment rate stable. She expects strong consumer spending and business investment will support the job market going forward.
The Fed held rates steady last month in the range of 3.5% to 3.75% after cutting rates three times last fall.
Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.
Click here for the latest economic news and indicators to help inform your investing decisions
Read the latest financial and business news from Yahoo Finance