Federal Reserve Bank of Cleveland President Loretta Mester said she would support another interest-rate increase at the Fed’s next policy meeting if the economy is performing about the same as at the time of the September gathering.
(Bloomberg) — Federal Reserve Bank of Cleveland President Loretta Mester said she would support another interest-rate increase at the Fed’s next policy meeting if the economy is performing about the same as at the time of the September gathering.
“If the economy looks the way it did at the next meeting similar to the way it looked at our recent meeting, I would do the further rate increase,” Mester told reporters on a conference call Tuesday.
Mester said she was concerned that the median projections Fed officials issued last month show them reaching their 2% inflation goal later than what was expected in June. But she said decisions will be made at future meetings based on how the economy evolves. “We’ll wait and see all the data coming in and make the evaluation at the time,” she said.
Fed officials voted last month to leave the target range for their benchmark rate unchanged at 5.25% to 5.5%, a 22-year high. Projections published at the same time showed 12 out of 19 policymakers expected one more rate increase for this year, and fewer rate cuts in 2024 than previously anticipated.
Mester, who does not vote on monetary policy decisions this year, said officials are watching a recent rise in long-term Treasury yields, which she said can help to tighten financial conditions and moderate growth. However, she said it’s not clear that the increase would be sustained.
The Fed official said she does not think it would be “appropriate” to hold rates at current levels until inflation is back to 2% since “policy affects the economy with a lag.”
The Cleveland Fed chief said on Monday that the US central bank will likely need to raise rates once more this year, and then hold them at higher levels for some time to get inflation back to target.
She repeated on Tuesday that she thinks officials are “probably near the peak in rates” and that they will need to be held at higher levels for some time to bring inflation down.
(Updates with more comments starting in the 2nd paragraph)
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