Fed’s Hammack warns further rate cuts could destabilize markets

Fed’s Hammack warns continued rate cuts could encourage risky lending, raising systemic financial stability risks.

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Fed’s Hammack warns further rate cuts could destabilize markets

Fed’s Hammack warns further rate cuts could destabilize markets
Cleveland Fed President Beth Hammack cautioned that more interest rate cuts risk **financial stability**, citing easy credit, surging asset prices and rising leverage in non-bank sectors. She argued that lowering borrowing costs further could fuel risky lending and distort pricing dynamics, potentially amplifying downside risk in a future downturn. 
Hammack also said that while a looser policy may support jobs, it could worsen inflation and weaken the resilience of the financial system.
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  • global policy