2023-08-26 19:15:37
© Reuters. Cleveland Federal Reserve Chair Loretta Mester opens financial conference in Washington 12/5/2014 REUTERS/Gary Cameron
By Ann Saphir and Howard Schneider
JACKSON HOLE, Wyoming (Reuters) – Overcoming inflation will likely require another U.S. interest rate hike and then a holding plateau “for a while,” the Cleveland Federal Reserve Chair said. , Loretta Mester, this Saturday, adding that she may reassess her earlier forecast that the rate cuts could start in late 2024.
While she doesn’t want a policy so rigid that it causes the economy to collapse, the president told Reuters in an interview at the Fed’s conference in Jackson Home, Wyoming, that she wants to set it up so that inflation reaches the 2% target of the Fed by the end of 2025.
“We just don’t want her to keep pulling away,” he said.
Rapidly rising prices not only impose a high cost on Americans, but also make the economy more vulnerable to future shocks.
“The longer we let inflation remain above 2%, we will be building an ever higher price plateau,” he said, and that hurts American families. “And I think that’s why I think timing is important to me.”
Most Fed policymakers, including Mester, thought in June that they would likely be able to stop the hikes once the rate reached between 5.5% and 5.75%, a quarter of a percentage point higher than the current level. .
They also thought that, by next year, the Fed would probably start to lower the rate so that, as inflation falls, they don’t end up tightening the economy more than necessary.
(Reporting by Ann Saphir)
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