Fed’s Mester sees 3 rate hikes this year, starting in March

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Cleveland Fed Chair Loretta Meester said Tuesday that, given the outlook for persistent inflation, she would support rate hikes in March if the economy continues on its current path, adding that it has seen a total of three quarter-point increases this year. is of. ,

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“If the economy in March looks like it is today and the outlook is the same … then I would support raising the money rate at that meeting,” Meester said. In an interview on Businesshala News.

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The Fed has maintained an easy policy stance since the pandemic, with rates at zero and monthly purchases of Treasury and mortgage-backed securities.

Given that inflation is “above where we need it to be” and labor markets are tight, “the case for the Fed to back some of that accommodation is really strong,” Meester said.

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Meester said the Fed’s goal was to keep the economy on a positive growth track, even as it was moving to bring down inflation.

“It’s going to be a challenge, no doubt about it,” Meester said.

The Cleveland Fed chairman, who is a voting member of the Fed’s interest rate setting committee this year, said the Fed will be able to move its balance sheet at a faster pace than during the previous cycle.

The balance sheet has nearly doubled to $8.8 trillion during the pandemic period.

She did not discuss when the Fed might start shrinking the balance sheet. The Fed’s asset purchases are now set to expire in mid-March.

Tuesday before In an interview with The Wall Street Journal, Atlanta Fed President Rafael Bostic said he was also prepared to hike rates in March.

And Esther George, president of the Kansas City Fed, backed from shrinking the balance sheet quickly.

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The low opened on Tuesday ahead of Fed Chairman Jerome Powell’s Senate panel testimony. Yield on 10 Year Treasury Note TMUBMUSD10Y,
1.768%
Has risen sharply this year and is flirting with 1.8%.

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