Fed's Mester sees rates rising more than most policy makers have forecast
18.12.2022, 19:11

Fed's Mester sees rates rising more than most policy makers have forecast

Speaking on Bloomberg’s television channel, Federal Reserve Bank of Cleveland President Loretta Mester said her estimate for interest rates is higher than that of her colleagues and the central bank needs sustained tight policy to defeat inflation.

Against the Fed’s projection that the current federal funds rate of between 4.25% and 4.5% will rise to 5.1% next year, Mester said, “I’m a little higher than the median.”

"We need to continue to bring up interest rates into a restrictive stance," Mester said.

"We did a lot of work this year" moving rates up aggressively, she said, adding once the Fed finishes raising rates, it will need to hold them there for "quite a while in order to get inflation on a sustainable downward path."

Her comments come after Wednesday's FOMC meeting where by the members raised the Fed's target rate by half a percentage point as it continues to work toward lowering the highest levels of inflation seen in decades.

Mester said recent inflation data pointing to moderating price increases is "good news," but added the data does not yet show that a peak in price pressures has occurred.

US Dollar update

The US Dollar, as measured by the DXY index, remains in a bear cycle while below the micro trendline. However, it was extending sharp gains in the previous session as risk appetite soured and investors weigh with the prospect that the Fed still have a long ways to go. 

 

 

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