Fed's Beth Hammack Warns Against Rate Cuts Amid Inflation
- Cleveland Fed’s Beth Hammack warns against rate cuts due to inflation.
- Cautious policy maintains economic stability, affects risk asset sentiment.
- Potential liquidity decrease in crypto and markets.
Cleveland Fed President Beth Hammack warned against further U.S. interest rate cuts at the Financial Stability Conference on November 20, 2025, emphasizing risks of persistent inflation if policy is loosened prematurely.
Hammack’s warning impacts crypto asset sentiment, reflecting cautious macroeconomic conditions that influence market behaviors. Bitcoin and Ethereum may see reduced investor appetite due to restrictive monetary policy.
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Beth Hammack’s Economic Stance
Beth Hammack, Cleveland Fed President, publicly warned that the reduction in interest rates could prolong elevated inflation. This stance reflects her advocacy for maintaining restrictive monetary policy to secure financial stability amid inflationary pressures. Hammack stated that lowering rates now risks persistent inflation and instability, as highlighted in her Financial Stability Conference remarks. She insists on keeping policy restrictive to return inflation to the Fed’s 2 percent target.
Beth Hammack, President, Federal Reserve Bank of Cleveland, “Inflation has been running above the Fed’s 2 percent objective for four and a half years. Lowering interest rates to support the labor market at this stage could risk persistent inflation and financial instability.” Cleveland Fed
Implications for Risk Assets
Hammack’s comments have implications for risk assets, including cryptocurrencies like BTC and ETH. Hawkish policies can reduce risk appetite, leading traditionally to net outflows from crypto as liquidity contracts. Elevated inflation impacts household spending on essentials. Financial markets should expect continued pressure with a focus on inflationary control. The policy affects speculative risk-taking and maintains economic caution in sectors tied to interest rates, echoing historical tightening tactics from 2018 and 2022.
Historical Impact on Crypto
Historical precedents indicate Fed tightening cycles directly impact risk assets, with significant pressure on crypto markets. BTC and ETH serve as macro risk proxies in such economic climates, reflecting broader financial movements. Potential outcomes include reduced liquidity in U.S.-centric DeFi protocols and stagnation in TVL. Cautious policy reaffirms the commitment to control inflation but may stifle growth in technology sectors reliant on macroeconomic stability.
