By Michael S. Derby
NEW YORK (Reuters) – Federal Reserve Bank of Cleveland President Loretta Mester said Friday that the latest round of inflation data is good news for the economy and the central bank.
After being higher than desired at the start of the year, “it is welcome to see that inflation is moving back down again, we’ll just need to see that continue a bit longer,” Mester said in an interview on CNBC.
Mester, who will retire at the end of the month, spoke on the television channel in the wake of this week’s Federal Open Market Committee meeting, which saw officials keep the central bank’s interest rate target at between 5.25% and 5.5%.
At the meeting, officials also pared back expectations of what had been three quarter percentage point rate cuts this year to one, in forecasts that also penciled in higher expectations of price pressures this year relative to their view in March. Those projections arrived as incoming data already pointed to looming relief on inflation, which caused some to wonder if the Fed is being slow to take the shift in price pressure dynamics.
“I’m pretty confident that the committee is doing good work here,” Mester said. “I don’t think that the discussion around the table feels like we’re totally out of whack with what’s going on with the market. If you look at sort of where the market is and where our assessments are, they’ve come together over time.”
Mester, who has had her last vote on the FOMC, did not offer much guidance as to when she believes the Fed will be able to cut rates beyond saying she’d like to see “a few more months” of softening inflation data before gaining confidence price pressures are heading back to 2%.
In the meantime, “we’re in a very good position with monetary policy right now” to deal with the risks and challenges to the Fed’s inflation and employment mandates, Mester said.
(Reporting by Michael S. Derby; Editing by Chizu Nomiyama)
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