Cleveland Federal Reserve President Loretta Mester told CNBC on Friday the central bank could stop hiking interest rates this year if inflation doesn’t rise.
The U.S. economy is “in a really good spot,” said Mester, who was a voting member of the policymaking Federal Open Market Committee in 2018 but is not this year. “If we don’t see inflation picking up and we see the labor market staying reasonably strong from where we are now, that may tell us we’re not neutral.”
“The economy is going to be telling us where we are,” she added, indicating the Fed could later reconsider its rate hike projections.
The Fed last month raised its benchmark interest rate for a fourth time in 2018 and lowered its rate hike projection for 2019 from three to two. That helped fan a stock sell-off in which the Dow Jones Industrial Average and Nasdaq saw their biggest weekly losses in more than 10 years and the S&P 500 had its worst week since August 2011.