Cleveland Fed President Loretta Mester on the economic outlook:
Doesn’t see case to cut at the next Fed meetingFed policy in a good place to navigate risksFed 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 soonStrong economy gives Fed space to take stock before cutting ratesDoes not expect smooth path back to 2% inflationRisks to economic outlook have become more balancedNew sees longer-run Fed funds at 3.0% vs 2.5%Now sees GDP just above 2% this yearSees labor market in better balance.In her view, the inflation picture hasn’t changed much this year. She had assumed slower progress on inflationSays her forecast is similar to the median in the SEP
This article was written by Adam Button at www.forexlive.com.