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

WASHINGTON (AP) — 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 effective Aug. 21.

Hammack, 52, worked at Goldman Sachs from 1993 until stepping down earlier this year. She was most recently the cohead of global finance, and has also served as global treasurer and held senior trading roles. Hammack was named a partner in 2010.

Hammack's appointment comes at a critical moment for the Fed. Chair Jerome Powell has emphasized that the central bank will keep its key rate at a 23-year high of about 5.3% in an effort to combat inflation, which has fallen sharply from its peak to 2.7%, according to the Fed's preferred measure. Yet inflation remains above the Fed's 2% target.

The Fed is seeking to both keep borrowing costs high to reduce inflation while at the same time trying to avoid an economic slowdown or recession that can sometimes result from too-high interest rates, which raise the cost of a mortgage, auto loan, credit card debt, and business borrowing.

Hammack will follow Loretta Mester, who is retiring June 30 after a decade as president of the Cleveland Fed. Fed presidents generally are required to step down once they reach the age of 65.

Hammack also served as chair of the Treasury Borrowing Advisory Committee, a group of financial industry executives that advises the Treasury Department on government debt-management issues.

She grew up in Villanova, Pennsylvania and earned a degree in quantitative economics and history from Stanford University.

Mester was a longtime “hawk” on the Fed's interest-rate setting committee, which meant she generally preferred higher interest rates to guard against inflation, while “doves” typically support lower rates to boost the economy and employment. Mester supported Chair Jerome Powell's sharp interest rate hikes to combat inflation in 2022 and last year, but has also been willing to entertain the possibility of rate cuts this year and has said she believes inflation is likely to continue falling back to the Fed's target of 2%.

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