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Cleveland Federal Reserve President Addresses Inflation and Interest Rates

Cleveland Federal Reserve President Loretta Mester stated that interest rates need to rise above 5% to bring inflation back to acceptable levels and expressed hope that the Fed can reach its goal without causing a recession while maintaining a healthy labor market.

Loretta Mester, Cleveland Federal Reserve President
Loretta Mester, Cleveland Federal Reserve President

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.

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