Fed’s Hammack: Unclear if tariffs will ultimately be one-time impact

Pablo Piovano FXStreet

Beth Hammack, the President of the Federal Reserve (Fed) Bank of Cleveland, struck a hawkish tone in remarks on Thursday, stressing the need to keep inflation in check. She warned that tariff impacts are only beginning to show in the economy and may intensify next year. While noting the Fed is close to neutral, Hammack dismissed the case for rate cuts in the near term.

Key Quotes

Both sides of the Fed mandate are under pressure.

Its important to maintain modestly restrictive policy to lower inflation.

Firms are trying to withhold passing on tariffs, but that can't last forever.

It's just now tariff impacts are starting to affect economy.

Full tariff impact won't be clear until next year.

Unclear if tariffs will ultimately be one time impact.

Biggest concern inflation is too high, and inflation has been trending in wrong direction.

Will view job data in context of broader economic changes.

Labor supply has come down dramatically.

The Fed needs to stay "laser focused" on too high inflation.

We have a small distance to get to neutral policy.

Does not see any sign of a notable economic downturn.

Does not see imminent case for cutting rates based on current data.

Doesn't think Fed policy is far from neutral policy, no need for stimulative policy.

US-China Trade War FAQs

What does “trade war” mean?

Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

What is the US-China trade war?

An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

Trade war 2.0

The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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Fed’s Hammack: Unclear if tariffs will ultimately be one-time impact

Key Quotes