Fed’s Mester Says Hikes Could Stop if inflation Doesn’t Rise

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.

via CNBC

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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