|

Fed's Mester: US economy is doing well, Fed is on hold

Fedspeak has resumed on Monday with Cleveland president Mester (hawk) at the University of Maryland who has stated that the US economy is doing well and that the Fed is on hold while watching how it evolves. 

Further comments:

  • US economic growth is basically around trend.
  • There is still solid growth in the labour market.
  • The underlying inflation rate looks like it is rising toward Fed's 2% goal.
  • Some risks remain, such as uncertainty on U.S. trade policy.
  • The U.S. consumer has been strong and resilient.
  • Monetary policy is now well-calibrated to the economy.
  • The Fed is basically "on hold," watching how US economy evolves.
  • She is watching for any signs of sectoral weakness spreading to wider US economy.
  • She preferred not to cut interest rates at the Fed's last meeting.
  • She is sympathetic to the view though that those interest rate cuts made sense and was a close call.
  • Says the Fed should be reviewing its framework periodically.
  • Fed is talking about whether to have standing repo facility. 
  • Fed has not come yet to a determination as to whether to set up a standing repo facility. 
  • Negative interest rates are negative in Europe and are working better than anticipated.
  • She doesn't support using negative rates in the US. 
  • Fed's Mester: Forward guidance in future may be tied to economic conditions

FX market implications:

There has been no reaction to the comments from Mester, a known hawk, despite her sympathy for the recent rate cuts which took some sting out of the US Dollar which reached a peak of 99.67 back on the 1st of October earlier this year. The DXY is currently trading at 97.74, -0.27% on the day having travelled between 97.68 and 97.98. Manwhile, and according to analysts at Westpac, the markets are pricing a "minimal chance of easing at the December meeting and a terminal rate of 1.27% (vs 1.63% currently)." 

Author

Ross J Burland

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.

More from Ross J Burland
Share:

Editor's Picks

AUD/USD seems vulnerable near 0.6800, 10-month low amid bullish USD

AUD/USD languishes near a 10-month low during the Asian session on Friday, awaiting a break below 0.6800 before the next leg up amid a bullish US Dollar. Firming Fed rate-hike expectations, along with fading hopes for US-Iran diplomacy, help the USD hold gains at its highest level since April 2025. Moreover, the RBA’s dovish tilt undermines the Aussie and backs the case for further losses.

USD/JPY bulls turn cautious near 160.00 amid intervention risks

USD/JPY enters a bullish consolidation phase around its highest level since early September as bulls turn cautious amid intervention risk near 160.00. Meanwhile, the downside seems cushioned as the wide US-Japan interest rate gap keeps the Yen carry trade active. Furthermore, the possibility of a jumbo Fed rate hike and Middle East uncertainties hold the US Dollar near a 19-month top, supporting the currency pair.



Gold remains on the back foot below $3,900

Gold now alternates gains with losses below the $3,900 mark per troy ounce on Friday. The precious metal struggles to regain traction amid the firmer US Dollar, mixed US Treasury yields and expectations of further tightening by the Fed at its December meeting.

Bitcoin just posted five straight losing weeks, and the storm may not be over yet

Bitcoin is struggling to find support, slipping below $70,000 as multiple headwinds threaten to push the Crypto King lower. The much-anticipated “Uptober” rally failed to materialize, with persistent selling pressure and widespread liquidations instead reinforcing the “Rektober” narrative.

Week ahead – Fed Minutes, inflation data and Nvidia earnings to guide investors

Fed minutes may add to hawkish tone as bets of 50-bps hike grow. Nvidia to report earnings as bar to impress high after spy scandal. Trade and geopolitics to be focal point of Trump-Xi summit.

Gold hit its lowest level of 2026 near $3,850
Gold (XAU/USD) attempts to stabilize around $3,890 on Friday after falling to $3,852 on Thursday, its lowest level since October 2025. The precious metal has lost more than 4% this week, as investors increasingly anticipate further monetary tightening from the Federal Reserve (Fed). The latest decline reflects a sharp change in market expectations.
Fed's Mester: US economy is doing well, fed is on hold