Federal Reserve official who cast the only dissenting vote at the December meeting explains: Why did he not support the rate cut? (Full text attached)

On Friday, Cleveland Federal Reserve President Beth M. Hammack made a statement regarding her vote at the FOMC meeting of the Federal Reserve scheduled for December 17-18, 2024.

The following is the original statement:

The FOMC committee decided to lower the target range for the federal funds rate by 25 basis points to 4.25%-4.5%

The U.S. economy is in good condition, but further efforts are needed on the inflation issue. Economic growth is strong, and the labor market is healthy. Overall financial conditions have eased, and business confidence remains solid. Monetary policy has played an important role in significantly reducing the personal consumption expenditures (PCE) inflation rate from a peak of 7.2% in the summer of 2022. Despite these positive developments, inflation remains high, and recent progress in restoring inflation to 2% has not been uniform.

Given the health of the labor market, restoring inflation to 2% in a timely manner remains an important goal. To achieve this, I believe monetary policy needs to remain moderately restrictive for some time. Based on my assessment that monetary policy is currently close to a neutral stance, I prefer to keep policy stable until we see more evidence that inflation is returning to the target path of 2%.

Given the strong performance of recent economic data, easing financial conditions, and my forecast that inflation will remain above 2% in a healthy labor market over the next year, I believe it is best to maintain the target range for the federal funds rate at 4.5% to 4.75% at the December 2024 meeting.

The momentum of the economy and the recent high inflation data have led me to raise my forecast for inflation next year. Additionally, the balance of risks in the outlook seems to lean towards rising inflation. If inflation stagnates above 2% for too long, it could lead to a loss of control over inflation expectations, making it more difficult to restore inflation to the target level.

I believe my decision is a difficult choice, and I am very grateful for the diverse perspectives provided by my FOMC colleagues during our in-depth discussions. I look forward to continuing to work with my FOMC colleagues to serve the American public and seek the best path to achieve our monetary policy goals in pursuit of our dual mandate of maximizing employment and price stability.

At this Wednesday's FOMC meeting, although the rate cut was the same as last time and was a routine action, it was unexpectedly noted that there were Federal Reserve decision-makers who voted against continuing the rate cut. This marks the second time since the start of this round of rate cuts in September that the Federal Reserve's decision has not received unanimous support from all decision-makers.

According to the resolution statement, at this week's FOMC meeting, the dissenting vote came from Cleveland Federal Reserve President Hammack, who wished to keep rates unchanged, advocating for a pause in rate cuts.

Analysis suggests that the unexpected dissent from officials at this meeting has created cracks in the unified front within the Federal Reserve.

The day before the Federal Reserve announced the rate cut, "New Federal Reserve News Agency" Nick Timiraos's article had already revealed divisions within the Federal Reserve. His article stated that this week's rate cut might end the first phase of the rate cut cycle, as internal questioning within the Federal Reserve has intensified, with some officials wanting to see more concrete evidence that inflation is improving or that the labor market is deteriorating before continuing to cut rates