Fed's Mester: A recession could happen as rates rise

Ross J Burland FXStreet

Reuters reported that Cleveland Fed President Loretta Mester said as the Federal Reserve's higher interest rates slow the economy, a recession may result, though it's not part of her baseline forecast and is not what the central bank wants.

"I don't think it's a positive outcome, but it may happen," Mester said. "We may have a mild recession - I can't rule that out. I haven't penciled that in to my own projection, but when you have growth well below trend, it wouldn't take that much of a negative shock -- but again I don't think that's necessarily a positive thing, that's not what we are engineering to do."

US Dollar update

As measured against a basket of currencies, the US Dollar has been breaking to the upside and out of a geometrical consolidation's top side resistance albeit on the backside of the prior bullish trends supporting lines.

The DXY closed firmly above 103.65/80 on Thursday and that is making the case for higher. However, a sell-off could come of a squaring of positions on Friday.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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