Cleveland Fed Pres. Mester is speaking on Bloomberg TV and says:
- Monetary policy is restrictive.
- Inflation progress stalled in first three months
- April CPI report was good news, but too soon to tell what path inflation is on
- Labor markets are becoming better balanced
- Rebalancing labor market will put downward pressure on inflation.
- We need to gather more evidence on inflation path to determine if it sustainably heading toward 2%
- In the first part of the year risks that fit is too restrictive and went down.
- Inflation risks are tilted to the upside.
- I don't think about potential rate cut in terms of when.
- Rate cut depends on progress with inflation.
- Lack of progress on inflation was not welcome.
- No risk in spending more time gathering data on inflation because the economy is strong.
- Monetary policy is moderating demand, but not as fast as expected.
- Still think inflation will come down.
- But inflation won't come down quickly.
- Policy is well-positioned for risks on either side.
- If there is unforeseen deterioration on real side of economy, can cut rates.
- Can hold rates or even raise them if inflation against expectations stalls out or reverses.
- We have to be careful in monitoring the economy.
- Neutral rate may be higher than thought before. I raised my estimate of it in March.
- Previously I expected three rate cuts this year, I do not think that still appropriate.
Mester will be retiring as the Cleveland Fed president in June. As result, her comments are more of an outsider rather than insider.
I don't think any Fed officials are looking to do anything in June (right now), except to sit back Her comments are consistent with a Fed that is on hold, and Content in seeing more data given the strength of the economy and the risk of inflation perking up.
