Fed’s Mester Says Economy Can Handle Rate Hike

The U.S. economy “can handle” an increase in interest rates despite the risks around the outlook, said Cleveland Fed President Loretta Mester, on Thursday. “It is appropriate for monetary policy to take a step back from the emergency measure of zero interest rates,” Mester said in a speech at New York University Stern Center for Global Economy and Business. Given the outlook, Mester said interest rates should move up gradually.

Fed officials are divided over whether to hike interest rates this year. As a result, traders who bet on the future path of the fed funds rate now expect the first hike to occur in March 2016, according to CME FedWatch. Mester will be a voting member of the Fed policy committee in 2016.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.