Cleveland Fed’s Hammack: Dollar’s status depends on rule of law, effective capital markets, and central bank independence

In remarks at the US Monetary Policy Forum in New York City, Hammack said her base case is that 'policy should be on hold for quite some time,' adding that she sees 'two-sided risks to rates'

Federal Reserve Bank of Cleveland President and CEO Beth Hammack delivered remarks for the panel "On the Safe-Haven Status of the Dollar" at the 2026 US Monetary Policy Forum in New York City.

Key quotes

On the dollar's international status

"The dollar's status depends on preserving the fundamental qualities that underlie its strength." Hammack listed those qualities as the rule of law, deep and liquid capital markets, and an independent central bank.

On how the Fed impacts the dollar's status

"The Fed's independence, along with its accountability to Congress, is critical to maintain the world's confidence in our commitment to 2 percent inflation."

"Delivering on our commitments is an important way the Federal Reserve helps ensure the dollar remains a reliable store of value and that Americans continue to reap benefits from its global status."

On monetary policy

"Under my base case, I think policy should be on hold for quite some time as we see evidence that inflation is coming down and the labor market stabilizes further. But it's easy to envision other scenarios, as well, so I see two-sided risks to rates."

Anecdote from the speech

"On the evening of Friday, August 5th, 2011, Standard & Poor's downgraded the United States' long-term credit rating to AA+. At the time, I ran a US cash trading desk, and there were lots of questions about how markets would react to the government's first rating below AAA. Even though stock market indexes fell the following Monday, Treasury prices rallied. Investors were willing to accept lower yields on US government debt rather than higher yields that are often necessary for lower-rated securities. The value of the US dollar declined relative to the Japanese yen and the Swiss franc in the days that followed. But the broad trade-weighted dollar index rose. This experience reinforced to me that, in times of financial trouble, investors and governments alike place great trust in the US dollar."

Read the full text: Remarks for the Panel: On the Safe-Haven Status of the Dollar