Cleveland Fed names former Goldman Sachs exec Beth Hammack to succeed Mester as president

WASHINGTON – The Cleveland branch of the Federal Reserve said Wednesday that Beth Hammack, a former executive at investment bank Goldman Sachs, would be its next president starting Aug. 21.

Hammack, 52, worked at Goldman Sachs from 1993 until leaving the position earlier this year. Most recently, she was co-head of global finance and also served as global treasurer and held senior commercial roles. Hammack was named partner in 2010.

Hammack’s appointment comes at a critical time for the Fed. Chairman Jerome Powell has emphasized that the central bank will keep its benchmark rate at a 23-year high of about 5.3% in an effort to combat inflation, which has fallen sharply from It peaked at 2.7%, according to the Fed’s preferred measure. However, inflation remains above the Fed’s 2% target.

The Fed seeks to keep borrowing costs high to reduce inflation and, at the same time, tries to avoid an economic slowdown or recession that can sometimes result from interest rates that are too high, which increase the cost of a mortgage, a loan to purchase a car, using a credit card. debt and commercial loans.

Hammack will follow Loretta Mester, who will retire on June 30 after a decade as president of the Cleveland Fed. Fed chairs are generally required to resign when they reach the age of 65.

Mester was a longtime “hawk” on the Fed’s interest rate-setting committee, meaning he generally preferred higher interest rates to protect against inflation, while “doves” typically supported lower rates to boost inflation. the economy and employment. Mester supported Chairman Jerome Powell’s sharp interest rate hikes to combat inflation in 2022 and last year, but is also willing to entertain the possibility of rate cuts this year and has said she believes inflation will likely continue to fall toward target. Fed rate of 2%.

Mester was a voting member of the Fed’s interest rate-setting committee this year and will have a vote at its next meeting on June 11-12. Hammack will then vote at Fed committee meetings in September, November and December. All 12 regional Fed presidents attend the central bank’s eight meetings each year when they set interest rate policy, but only five can vote on decisions. The New York Fed has a permanent vote and four others vote on a rotating basis.