Fed’s Mester Prefers Faster Pace of Rate Hikes

One of the Federal Reserve’s hawkish officials said on Sunday that while she prefers a slightly more aggressive approach, she is not opposed to her colleagues’ view that the U.S. central bank needs to raise interest rates only four times this year.

Loretta Mester, president of the Cleveland Fed, told Reuters in an interview she does not need to see clear evidence of inflation to back more policy tightening after an initial rate hike in mid-December. The Fed could act at any policy meeting, including one later in January, she said.

After lifting rates for the first time in nearly a decade, the Fed said further moves would be gradual and dependent on how the world’s top economy performs. The central bank last month forecasted four rate hikes in 2016, based on the median projection of its 17 top officials.

“I’m pretty comfortable with the median path … I think that’s not a bad description,” Mester, who votes on U.S. monetary policy this year under a rotation, said on the sidelines of an American Economic Association meeting.

“I’m probably a little steeper than that in the near term, just because I have a higher growth forecast.”

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