President’s Speech: “Balancing Act: The Dual Mandate on an Economic Tightrope”

President Hammack spoke at the Economic Club of New York on November 6, 2025.

In remarks at the Economic Club of New York, Federal Reserve Bank of Cleveland President and CEO Beth M. Hammack discussed how she views balancing the Fed’s dual mandate for maximum employment and price stability as similar to walking a tightrope. She said that she sees monetary policy as “barely restrictive, if at all, and it is not obvious to me that monetary policy should do more at this time.”

Key points

• Compared to our 2 percent objective, inflation is too high and it’s still trending in the wrong direction,” Hammack said, pointing to several factors as putting upward pressure on inflation. She noted that inflation has been running above the Fed’s 2 percent objective for four and a half years. “Based on all of these considerations, I don’t see elevated inflation as a purely transitory phenomenon that I should look through.”
• On the Fed’s maximum employment mandate, Hammack stated that the “downside risks to the labor market have been rising.” She added that her forecast calls for economic growth to pick up next year, eventually putting some downward pressure on the unemployment rate.
• In conversations with businesses in the Fourth Federal Reserve District, Hammack said she has heard that “virtually no one wanted to be the first to raise prices. But given the cost pressures they are facing, a number of those business leaders said the reality is that they will likely have to do so early next year.”
• On balancing the Fed’s maximum employment and price stability mandates, Hammack said: “…To me, comparing the size and persistence of our mandate misses and the risks, inflation is the more pressing concern. This argues for a mildly restrictive stance for our policy rate to ensure that inflation returns to 2 percent in a timely fashion.”

Hammack also discussed three main factors informing her estimate of r-star, including the economy’s recent performance, results from economic modeling, and cues from financial markets. “My growing sense is that the period of ultra-low rates and low r-star we experienced following the GFC—which was coupled with household deleveraging and regulatory tightening—was an anomaly rather than a new normal.”

Read the full speech.

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.218.1892