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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.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
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