Federal Reserve FOMC voting committee Hamak shouted “immediate interest rate hike” but economic data is releasing dovish signals one after another

The Zhitong Finance App learned that Cleveland Federal Reserve Chairman Beth Hammack (Beth Hammack), one of the FOMC voting committees of the Federal Reserve in 2026, questioned whether the recent signs of a slowdown in US inflation could continue, and once again reiterated her position that the benchmark interest rate should be raised now. However, according to Wall Street financial giant Goldman Sachs and some dovish FOMC voting committee members, the current key is not that inflation has returned to 2%, but whether supply shocks such as oil prices and tariffs have formed a real “two-round effect”. Therefore, the Fed is more suited to staying on hold (that is, keeping interest rates unchanged) to further achieve a “soft landing” of the economy.

Hamak said on Thursday local time: “I am very happy to see these data, especially the data on prices is falling — which is a good thing — but I am not confident that we will continue to see this trend, nor that these figures will be low enough for inflation to fall back to 2%.”

While attending an event hosted by the Dayton Regional Chamber of Commerce in Kettering, Ohio, she also said, “I think we need to act now on interest rates.”

Hamak opposed the Federal Reserve's decision to keep interest rates unchanged last month and said she would have preferred to raise the Fed's benchmark interest rate by 25 basis points. In an open interview with the media on Monday, she said that current interest rates do not form a “substantial limit” on the economy, and that it may take “several” interest rate adjustments to return to the target level; however, she does not want to prejudge what level interest rates should eventually fall to.

According to the US government's official CPI inflation data released on Wednesday, the core consumer price index (Core CPI) rose only 0.2% from the previous month after excluding food and energy categories that usually fluctuate a lot. Economists agree that this is a relatively moderate growth rate, reducing the pressure on policymakers to raise interest rates.

Regarding the market outlook for the Fed's rate hike path, to a certain extent, it has moved from “whether further tightening is needed” to the stage where “hawks must produce more evidence to raise interest rates.”

However, the “year-round standstill” forecast led by Goldman Sachs was not unconditionally established — the July PPI was still 4.7% year on year. According to the latest data, Reuters estimates that the core PCE may still be around 3.3%, while the geopolitical war in the Middle East, the “risk of dual energy consumption” in the Strait of Hormuz and the Mander Strait, and a new rise in crude oil prices may all cause inflation to rise again in August-September; if core inflation reaches about 0.3% or higher year on year in the next two or three months, the hawkish rate hike path may still revive.

The Federal Reserve's no-holds-up win rate rose during the year, and Wall Street giant Goldman Sachs is betting that “expectations of interest rate hikes will ultimately fall through.”

After the July CPI and PPI data just released on Thursday, the Federal Reserve's “remaining 3.50% to 3.75% unchanged for the rest of 2026” seems to be more suitable as a benchmark scenario than “restarting the interest rate hike cycle,” but the advantage is not big enough to completely rule out interest rate hikes.

The overall CPI for July was only +0.1% month-on-month, and the core CPI was only +0.2%, which was in line with the interest rate futures market's expectations for inflation and cooling; then, PPI for July was 0.0% month-on-month, significantly lower than market expectations of +0.2%, falling to 4.7% year over year from 5.5% in June, and core PPI was only +0.2% month-on-month, from 4.7% to about 4.2% year over year. Meanwhile, non-farm accidents fell by 23,000 in July.

This latest set of economic data means that the Federal Reserve is no longer facing “overheating demand+re-acceleration of inflation,” but that inflation is still above target, but that it is cooling marginally while employment is losing momentum — the threshold for immediate further policy tightening has been raised significantly under the Dual Mission (Dual Mission) framework. After the CPI was announced, the probability of interest rate hikes in September has been reduced from about 54% to about 40%; after PPI was further weakened, market pricing generally changed to about 65%, and the trend was to stay on hold in September.

This also makes the prediction logic of “the Federal Reserve stay on hold all year” more persuasive than a few days ago: the current key is not that inflation has returned to 2%, but whether previous supply shocks such as oil prices and tariffs have formed a real “second-round effect (second-round effects).”

Dibo believes that housing inflation has room to continue to decline, the labor market is not overheated, and that the wage-price spiral has not formed, so the Federal Reserve has time to wait for more data; the latest CPI/PPI just reinforces this judgment. What is more noteworthy is that this is not a completely isolated reverse view of Goldman Sachs — in a previous consultation and survey of economists conducted by Bloomberg Intelligence, the median forecast is still that the Federal Reserve will keep interest rates unchanged for the rest of 2026. In contrast, the three voting commissioners Hamak, Kashkari, and Logan advocated a rate hike of 25 bps in the July FOMC vote of 9-3, and they still believe that the policy is not sufficiently restrictive and should “act now.”