Fed’s Hammack tilts hawkish on rates, questions CPI drop as distorted

• Cleveland Fed President Beth Hammack, who will be a voter on the central bank's policy-making FOMC in 2026, says interest rates need to remain on hold for several months.
• She threw shade on last week's surprisingly soft CPI report, noting data-collection distortions created by the government shutdown.
• Other things being equal, bitcoin would typically benefit from easier Fed monetary policy, but that hasn't at all been the case in 2025.

It's no secret that Cleveland Fed President Beth Hammack has staked out a spot as perhaps the most hawkish member of the U.S. Federal Reserve since her appointment in 2024 after a career at Goldman Sachs.

Next year, however, she will be in a more prominent position to advance those views.

The Fed's Federal Open Market Committee (FOMC) sets interest rate policy. Among its twelve voting members are four of the Fed's eleven district presidents who serve rotating one-year terms. In 2026, the head of the Cleveland Fed — Hammack — will join that voting group.

"My base case is that we can stay here [with rates] for some period of time, until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially," Hammack told the WSJ over the weekend.

"I take it with a grain of salt," said Hammack of last week's November Consumer Price report, which showed a shocking decline in the headline rate of inflation to 2.7% from 3.1%, with a similar drop for the core rate.

Hammack blamed data distortions due the last fall's government shutdown, and her own calculation puts the rate at more like the 2.9% or 3.0% that economists had previously forecast.

All things being equal, easier central bank monetary policy is assumed to be good for risk assets like stocks, commodities and bitcoin BTC$88,210.61. While that's surely been the case this year for stocks and commodities like gold and silver — all of whom are at or near record highs — bitcoin has struggled, beginning a tumble from its own all-time record not long after the Fed's first rate cut in September.

A big break with Waller

Among the finalists to be President Trump's pick for the next Fed chair is current Fed Governor Chris Waller.

Waller three days ago said he judges the current 3.5%-3.75% level of the fed funds rate range as 50 to 100 basis points above the neutral level — meaning Fed policy remains fairly restrictive.

Hammack, though, told the WSJ that the fed funds range today is "a little bit below" the neutral rate, meaning she thinks current policy is at least somewhat stimulative.

That's a massively wide delta between two of 2026's key policy-setters. Wherever rates go in 2026, there are sure to be dissents on what is typically a unanimous or near-unanimous vote. Whoever ends up Fed chair could find it problematic to line up the seven votes needed at each meeting to set policy.

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• Galaxy Research, the research arm of Galaxy Digital (GLXY), says overlapping macroeconomic and market risks make bitcoin unusually difficult to forecast in 2026.
• The firm says that options pricing and volatility trends indicate that bitcoin is maturing into a more macro-like asset, rather than a high-growth trade.
• Galaxy maintains a long-term bullish outlook, projecting that bitcoin could reach $250,000 by the end of 2027.

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