Cleveland Federal Reserve President: Interest rates on hold ‘for a good while’

The Cleveland Federal Reserve President on Wednesday predicted that interest rates may stay where they’re at for a “good while” as economists debate the best response to the impact of tariffs and the war in Iran.

“My baseline is that we’re going to remain on hold for a good while, but I do think that there’s two-sided risks to rates,” Cleveland Federal Reserve President Beth Hammack said during a Wednesday appearance on “Squawk Box.”

“I think there’s risks that we might need to be more accommodative or more restrictive, depending on how the data comes out. But that’s why it’s a good time for us to stay patient and wait and see how the data flows through,” she added.

Treasury Secretary Scott Bessent on Tuesday told reporters the Fed is doing the right thing by “sitting and watching” but signaled that they should eventually move toward cutting rates.

Currently, the benchmark interest rate sits at 3.75 percent, which Hammack described as “good” amid uncertain conditions.

She also noted that the Fed would be eyeing “how high ​are energy prices going to stay and for how long are they going to stay there” as they evaluate reducing interest rates and keep a close watch on consumer spending, which if diminished could deflate economic growth.

“All of these successive supply shocks are hard to think about how we’re supposed to handle those from [a] monetary policy perspective,” she said.

“Normally, you like to look through these types of supply shocks, but when it’s coming on the back of already-elevated inflation, it may not be the same as it would be had we been entering this period at low and stable inflation,” Hammack added.

The Fed kept rates steady for the first part of the year, following three cuts last year.

Federal Reserve Chair Jerome Powell has shared a commitment to seeing the Fed return to its 2 percent interest rate, but has leaned against large basis point drops to maintain economic stability.

President Trump has expressed strong disapproval for the delay and threatened to fire Powell multiple times over slowness to act.

On Wednesday, the president threatened to fire Powell if he remains on the Board of Governors after his successor, Kevin Warsh, is confirmed by the Senate.

Powell’s term as chair expires on May 15 but he has two years left to serve on the Board. He hasn’t given an answer on whether he’ll stay or depart.

Trump said if he stays, “then I’ll have to fire him,” during an appearance on Fox Business’s “Mornings with Maria.”

“If he’s not leaving on time — I’ve held back firing him. I’ve wanted to fire him, but I hate to be controversial. I want to be uncontroversial,” he added.