Cleveland Fed taps Goldman Sachs veteran Beth Hammack as new president

The Federal Reserve Bank of Cleveland announced Wednesday that Beth M. Hammack will be its next president and chief executive officer after current president Loretta Mester retires at the end of June.

Hammack, 52, joins the Cleveland Fed after three decades at Goldman Sachs. She is slated to vote on monetary policy decisions as of August 21, when her term officially starts.

For the July meeting of the Federal Open Market Committee, Chicago Fed President Austan Goolsbee will be voting in place of the Cleveland Fed. At every Fed meeting, 12 Fed officials vote, seven of whom are from the Fed’s board of governors. Aside from New York Fed President John Williams, the remaining votes are from an annually rotating panel of regional Fed presidents. Goolsbee is currently an alternate voter and otherwise would not have voted until 2025.

Goolsbee has been a bit more optimistic than some of his colleagues regarding the progress he expects on getting inflation back down to the Fed’s 2% target. However, it’s unclear where Hammack stands on monetary policy.

The central bank is currently mulling when to begin cutting interest rates after raising them to a two-decade high last summer. Inflation stalled earlier this year, which prompted the Fed to delay the timing of its first rate cut, but weaker-than-expected figures on employment and spending thrust rate cuts back into the conversation.

Who is Hammack?

Through her three-decade career at the Wall Street bank, Hammack has developed experience working with policymakers and serving on advisory boards, according to a release from the Cleveland Fed.

She was chair of the federal government’s Treasury Borrowing Advisory Committee and a member of the Financial Research Advisory Committee and the Treasury Market Practices Group. She’s also currently the chair of the board of the nonprofit organization Math for America.

Hammack earned a bachelor of arts degree in quantitative economics and history from Stanford University.

“Beth has a deep understanding of financial markets and the monetary policy transmission process, expertise in leading complex business lines, and a proven commitment to mission-focused work,” said Heidi Gartland, chair of the presidential search committee and the Cleveland Fed’s board of directors, in a release.

Mester, who has been president of the Cleveland Fed since 2014, has typically had so-called “hawkish” views, or pronounced concerns about inflation. She recently said monetary policy is currently in a good place, and that there is no rush to cut rates at the moment.

A pivotal moment for the Fed

Hammack is joining the Fed as officials deal with the difficult task of figuring out when to begin cutting rates. It’s a consequential decision that carries risks if central bankers cut too soon and if they cut too late.

The Fed’s September meeting will be the first opportunity for Hammack to vote on US monetary policy. She joins the central bank at a critical juncture, as more Fed officials could start to vote differently from one another, which hasn’t been the case for years.

Currently, investors are split as to whether the Fed will keep rates at current levels or lower rates in September.

The Fed’s main tool is its key interest rate, which influences borrowing costs across the US economy. The Fed is tasked by Congress to stabilize prices and maximize employment, so, broadly speaking, when inflation is too high, the Fed jacks up borrowing costs; when unemployment is too high, it lowers interest rates.

If the Fed were to introduce its first rate cut of this cycle too soon, inflation could resurge as the economy reheats. If it cuts too late, the economy could cool too much and slip into a recession.

Hammack is yet another fresh face at the Fed’s main policymaking body, after the appointment of Alberto Musalem to helm the St. Louis Fed earlier this year. Last year, Jeffery Schmid became the president of the Kansas City Fed. Also, Adriana Kugler was confirmed for a role as Fed governor and Philip Jefferson was elevated as Fed vice chair. Lisa Cook was confirmed for another term.

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