Fed's Mester
Cleveland Fed President Loretta Mester on the economic outlook:
- Doesn't see case to cut at the next Fed meeting
- Fed policy in a good place to navigate risks
- Fed can cut rates gradually if economy meets expectations
Mester is a hawk but she's not exactly hawkish here. If anyone was going to say it was time to think about holding all year or hiking, it would be her or Bowman.
- Bigger risk to policy is to cut rates too soon
- Strong economy gives Fed space to take stock before cutting rates
- Does not expect smooth path back to 2% inflation
- Risks to economic outlook have become more balanced
- New sees longer-run Fed funds at 3.0% vs 2.5%
- Now sees GDP just above 2% this year
- Sees labor market in better balance.
- In her view, the inflation picture hasn't changed much this year. She had assumed slower progress on inflation
- Says her forecast is similar to the median in the SEP
