Fed's Mester: Policy will have to remain accommodative for a broad recovery
|Cleveland Fed President Loretta Mester said on Thursday that they have to be attuned to the fact that there are upside risks to inflation and reiterated that the Fed is monitoring the situation closely, as reported by Reuters.
Additional takeaways
"Unemployment rate could fall to 4.5% by year-end."
"Consumer price inflation readings will be high over next couple of months."
"Inflation expected to be over 2% for the year but move down next year."
"Factors that held back inflation pre-pandemic will reassert themselves."
"Fed wants some increase in inflation expectations and inflation."
"Policy will have to remain very accommodative for some time because we want recovery to broaden."
"The inflation she is expecting this year is not the sustainable inflation Fed is seeking."
"Taking a deliberately patient view on inflation."
"After FOMC decides conditions for tapering have been met, Fed will still be purchasing assets and policy will be accommodative."
"There isn't one number that defines maximum employment."
"Fed is not going to think a strong labor market means inflation is coming."
"We don't want to withdraw accommodation before it's appropriate."
Market reaction
The greenback remains on the back foot after these remarks. As of writing, the US Dollar Index was losing 0.35% on the day at 90.94.
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