Cleveland Federal Reserve President Loretta Mester stated that interest rates must increase to bring inflation back to acceptable levels. She recently gained attention for advocating for a half-percentage point interest rate hike at the last Federal Open Market Committee (FOMC) meeting.
Mester's Views on Central Bank's Benchmark Interest Rate
In a recent interview with CNBC, Mester stated that she believes the central bank's benchmark interest rate needs to rise above 5% and remain there for a while. The current fed funds rate, which affects various forms of consumer debt, is currently in the range of 4.5% to 4.75%.
Mester's Position on the Upcoming FOMC Meeting
Though she is a non-voter this year on the FOMC, she still has input into the committee's decisions. Mester stated that she is still determining if she will push for a half-percentage point increase when the committee meets again in March.
Economic Expectations and Hopes
Many economists believe that the Fed won't be able to reach its inflation goal without causing a recession. Despite this, Mester hoped the Fed could achieve its goal while maintaining a healthy labor market. She also stated that she believes that a contraction in the economy if it occurs, will not be severe.