Fed's Mester & Barkin: Fed needs more evidence economy is progressing as expected
|Federal Reserve (Fed) of Cleveland President Loretta Mester gave her perspective on the Fed rate outlook during a televised interview with Bloomberg.
Mester was closely followed by Richmond Fed President Tom Barkin, who broadly reiterated Mester's stance on Fed rates.
Key highlights
Cleveland Fed President Mester:
- Fed is not "there" yet on rate cuts, want more evidence that economy is progressing as expected.
- Fed's current evaluation is for how much longer rates to be kept high, policy kept restrictive.
- Inflation has to be coming down on a "sustainable basis" before rate cut conversation can happen.
- Fed needs to calibrate policy to achieve a soft landing.
- Slowdown of QT is not imminent, but Fed will have to begin discussing it this year.
Richmond Fed President Barkin:
- Needs to be "convinced" that inflation is headed to target.
- Will be open to lowering rates once inflation is on track to 2%.
- Banks likely want to hold more liquidity than prior to the pandemic.
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