Fed Mester Says Central Bank Should Raise Rates More than Once

Cleveland Federal Reserve Bank President Loretta Mester on Thursday repeated her call for further U.S.-interest rate hikes now that the economy has reached full employment and inflation is nearing the Fed’s 2-percent goal.

“I think that it’s important for the FOMC to remain very vigilant against falling behind, especially given the low level of interest rates and the large size of our balance sheet,” Mester said, referring to the Fed’s rate-setting Federal Open Market Committee. Mester said that while the Fed need not raise rates at every meeting, it should raise rates more than once this year.

Mester is not a voter this year on policy, and in Thursday’s comments largely repeated views she has held for some time.

She said she is comfortable with the Fed beginning to trim its $4.5 trillion balance sheet this year, and that once the Fed has detailed its plan to reduce its holdings, it should stick to the plan and rely only on short-term rate policy to manage its response to changing economic conditions.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza