The U.S. Federal Reserve has now met its employment goal and is nearing its inflation goal, despite some weak recent economic data, so it should continue raising interest rates, Cleveland Fed President Loretta Mester said on Monday.
In a speech that largely reinforced her upbeat view of the U.S. economy, Mester, a hawkish Fed policymaker, said that while risks are “roughly balanced” the central bank should not delay further policy tightening until its two key mandates are fully met.
“We have met the maximum employment part of our mandate and inflation is nearing our 2 percent goal,” Mester, who regains a vote on the Fed’s policy committee next year under a rotation, said at the Chicago Council on Global Affairs.
“Although we live in a high-frequency world, we cannot overreact to transitory movements in incoming data,” she said in prepared remarks.
The comments reinforced the expectation among most investors and Fed officials that the central bank will likely raise rates another notch in June, after having tightened twice since December, and do so yet again before year end.
Mester also repeated she would back starting the process later this year of shedding some of the $4.5 trillion in bonds in the Fed’s portfolio. She largely dismissed a weak inflation reading in March and soft overall economic growth in the first quarter as one-off events.
via Reuters
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.