Beth M. Hammack, President of the Federal Reserve Bank of Cleveland and a voting member of the Federal Open Market Committee (FOMC) in 2026, warned in a Q&A with Goldman Sachs that supply shocks can feed on themselves. As the shocks progress, firms can come to expect even more, a cycle that worsens inflation and becomes self-fulfilling.
The strain is showing up in household budgets: high inflation is forcing lower-income families to juggle expenses rather than simply trade down to cheaper items, and Hammack said she is hearing more from lower-income Americans who are struggling. The Cleveland Fed runs a Center for Inflation Research, so it is looking at all aspects.
She sees no strains in the financial system, though she stressed the Fed is always looking for “vulnerabilities.” Turning to AI, she is trying to understand how much of the economy is levered to it, and she judges the neutral rate by watching firms’ attitude to risk.
The Fed leans on hard data, she said, supplemented by market performance and in-person collection of anecdotes.
Rounding out her remarks, Hammack drew on her three decades at Goldman’s trading desk, where coming from an all-girls school left her never afraid to express opinions. Her advice for climbing the ranks: spread the word on which jobs you could fill long before a position opens, because wanting the boss’s job is not enough.
Key Quotes:
Inflation
Progression of supply shocks can lead firms to expect even more, worsening inflation, becoming self-fulfilling
High inflation forcing lower incomes to juggle expenses rather than just trading down to less expensive items
Cleveland Fed Bank has Center for Inflation Research so looking at all aspects
Monetary Policy
Judge neutral rate by seeing firms’ attitude to risk
AI & Productivity
Trying to understand how much economy is levered to AI
Financial Conditions
Not seeing strains in financial system; firms getting financing
Even people on Wall Street don’t know everything Fed does; always looking for ‘vulnerabilities’; constant research
On the Ground / Real Economy Feedback
Depend on hard data supplemented by market performance and in-person collection of anecdotes
Hearing more from lower-income Americans struggling with inflation
FOMC Process
FOMC process starts with blackout period starting tomorrow at midnight, then Saturday, get 150 page ‘Teal Book’
In preparing for FOMC, work through Teal Book, assemble viewpoints next week, then fly to DC following Monday
In FOMC meeting, have to leave cellphones behind ‘and just listen’; can be exhausting
In FOMC meeting, blankets available because room is cold; have discussions, then last 60 seconds, the vote
Financial Crisis Experience
During financial crisis, was running Fannie/Freddie agencies desk; then closely examine positions, liquidity
During financial crisis, husband worked for Lehman where optimistic view of events was diametrically opposed; then Lehman ran out of money
Career & Workplace Culture
From coming from all-girls school, never afraid to express opinions at Goldman’s trading desk where spent 3 decades
At Goldman, was culture among women of mutual support, unlike previous eras; friends can be mentors too
After meetings, can’t recount all that did wrong except to one friend; must project confidence
In career, some positions advocated for, others presented opportunities; have to do more than just want boss’s job
If want to advance in firm, have to spread word on what jobs could fill long before position becomes available