Fed's Mester: Not expecting we will cut interest rates early next year

Eren Sengezer FXStreet

"We will certainly not continue to raise interest rates until inflation has already fallen to 2%," Cleveland Federal Reserve President Loretta Mester told Borsen Zeitung in an interview.

"Nor will we wait to lower interest rates until inflation is at 2%," Mester added and noted that she does not currently expect that they will cut interest rates early next year.

When asked about whether it is better to do too much than too little in case of doubt, "we still have quite strong demand at the moment. And the same goes for the labour market. I think the cost of undershooting in monetary policy at the moment is still higher than the costs of overshooting," she responded.

Market reaction

The US Dollar Index preserves its bullish momentum after these comments and was last seen rising 0.7% on the day at 104.87.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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