Cleveland Fed's Mester sees two more 50-bp rate hikes, then reassess pace
Jun. 02, 2022 1:32 PM ET
Like most other Federal Reserve officials, Cleveland Fed President Loretta Mester expects the central bank to increase its policy rate by 50 basis points for each of the next two meetings, she said during an online speech sponsored by the Philadelphia Council for Business Economics.
It will then be appropriate to assess the pace at which the Fed should tighten, she said. "The federal funds rate will probably have to go above the expected longer-term neutral rate. But we cannot assess that today," Mester said.
It will depend on how the economy evolves, she added. Her own estimate for long-run neutral rate is 2.5%.
While the risk of recession has increased, she expects a "sharp slowdown can be avoided."
Jun. 02, 2022 1:32 PM ET
Like most other Federal Reserve officials, Cleveland Fed President Loretta Mester expects the central bank to increase its policy rate by 50 basis points for each of the next two meetings, she said during an online speech sponsored by the Philadelphia Council for Business Economics.
It will then be appropriate to assess the pace at which the Fed should tighten, she said. "The federal funds rate will probably have to go above the expected longer-term neutral rate. But we cannot assess that today," Mester said.
It will depend on how the economy evolves, she added. Her own estimate for long-run neutral rate is 2.5%.
While the risk of recession has increased, she expects a "sharp slowdown can be avoided."
