High inflation makes it ‘very compelling’ for central bank to raise interest rates, Cleveland Fed leader says
“We need to take action” to make sure inflation remains low and that the expected path of public inflation remains in line with the Fed’s 2% target, Ms Meester said. “If things look like they do today in March then I would support the raise, from zero to zero at that point,” she said. The official reiterated that he believes the Fed will raise rates three times in 2022.
Ms. Meester is a voting member of the Federal Open Market Committee on rates-setting this year because of the rotation of regional Fed leaders on that panel. He spoke in the wake of the release of consumer-level inflation data, which showed the highest level of price pressure since 1982.
Inflation growth of unpredictable magnitude and duration has led to a rapid change in the approach of central bank policy. The Fed has accelerated the decline of its bond-buying stimulus effort in March, putting it on a path to end those purchases, and many central bank officials expect the Fed to be able to boost its near-zero interest rate as well. Will happen. Target range at that spring gathering.
In attendance, Ms Meester did not say when she would like to begin reducing the size of her balance sheet as part of withdrawing support to the Fed. She said she wants the Fed to reduce the size of its $8.8 trillion holdings “as soon as possible” unless it is disruptive to financial markets.
Ms Meester said she was unwilling to say which path she wanted the Fed to take on the balance sheet, but wanted all options on the path to smaller holdings to be explored.
Write At [email protected] Michael S. derby