Fed's Hammack (2026 voter) says the Fed in good position with policy ‘to see how things play out’

• Current Fed target rate ‘in vicinity’ of neutral (Powell has previously said in a plausible range of neutral, albeit towards the higher end).
• Fed rate policy could be on hold 'for quite some time’.
• Sees growth boosted by Fed policy, financial conditions and fiscal support.
• Both sides of Fed’s mandate have been under pressure.

• Inflation is ‘still too high’ and tariff issues still in play.
• Expects inflation to ease as year moves forward, but that’s just a forecast.
• There’s a risk inflation could stick at 3% this year and needs to come down.
• 'Cautiously optimistic’ about economic outlook.

• Job market stabilised into low hire, low fire landscape.

Hammack's comments suggest a cautious yet stable outlook from the Fed, indicating that policy may remain unchanged for an extended period as they assess economic conditions. His view that inflation remains too high while he anticipates a gradual easing implies a delicate balancing act for monetary policy, which could influence market sentiment and expectations for future rate hikes. Overall, this could signal to traders that any adjustments in the Fed's stance might be further off than previously speculated, potentially affecting the USD and fixed income markets.