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☆ Fed's Mester says Fed at or near peak for interest rate target
▼ + stars: | 2023-10-20 | by ( Michael S. Derby | ) www.reuters.com time to read: +2 min

Mester noted Fed forecasts released at the September meeting eyed another increase in what is currently a federal funds target rate range of between 5.25% and 5.5% by the end of the year, and then to hold rates steady at high levels for an extended period. “This is consistent with my own reading of economic conditions, the outlook, and the risks to the outlook,” she said. Mester, who does not have a vote on the Federal Open Market Committee this year, also noted that the outlook for policy can change. In her remarks, Mester said inflation pressures are coming down but remain too high. Mester also said that if the recent surge in bond yields is sustained it should help moderate demand, which aligns with Fed goals.

Persons: Loretta Mester, ” Mester, Mester, ”, Michael S, Andrea Ricci Organizations: Federal Reserve Bank, Cleveland, Federal, Fed, Thomson

The collective impact of higher rates across the economy could also weaken the government's own finances. With borrowing rates high and inflation still relatively elevated, consumers, who drive about 70% of economic growth, are expected to spend more cautiously. “Those tighter, higher rates will have an impact on the economy.”Financial analysts point to several reasons for the rapid increase in lending rates. Overseas buyers have reduced their purchases, thereby forcing rates higher to attract buyers. “All of that is driving these fears of higher rates, and no one knows when it’s going to stop,” said Gennadiy Goldberg, head of US rates strategy at TD Securities.

Persons: Kevin McCarthy, Goldman Sachs, Goldman, Freddie Mac, Loretta Mester, ” Mester, it’s, ”, Gennadiy Goldberg, Benson Durham, Piper Sandler, Durham, Jerome Powell, ‘, we’re, ’ ”, Nancy Vanden Houten, David Page Organizations: WASHINGTON, United Auto Workers, Representatives, Republican, Treasury, Federal Reserve Bank of Cleveland, ”, Fed, Treasury Department, TD Securities, Oxford Economics, AXA Locations: U.S, ’ ” Durham, London

WASHINGTON (AP) — U.S. job openings unexpectedly rose in August, another sign the U.S. labor market remains strong despite higher interest rates — perhaps too strong for the inflation fighters at the Federal Reserve. American employers posted 9.6 million job openings in August, up from 8.9 million in July and the first uptick in three months, the Labor Department said Tuesday. ""Yes, the job market is still retaining a lot of heat,'' he said, "but it hasn't gone back on the boil.'' The Federal Reserve wants to see the red-hot U.S. job market cool off, reducing pressure on businesses to raise pay, which can feed into higher prices. The Fed chose not to raise rates at its last meeting Sept. 19-20.

Persons: Economists, —, Nick Bunker, hasn't, Jerome Powell, Dow Jones, Rubeela Farooqi, Loretta Mester, “, ” Mester, Christopher Rugaber Organizations: WASHINGTON, —, Federal Reserve, Labor Department, Federal, Fed, Federal Reserve Bank of Cleveland, AP

☆ Fed's Mester says one more U.S. rate hike may be needed
▼ + stars: | 2023-10-02 | by ( Michael S. Derby | ) www.reuters.com time to read: +3 min

FILE PHOTO: Cleveland Fed President Loretta Mester takes part in a panel convened to speak about the health of the U.S. economy in New York November 18, 2015. REUTERS/Lucas Jackson/File PhotoNEW YORK (Reuters) - Federal Reserve Bank of Cleveland President Loretta Mester said Monday that the U.S. central bank most likely isn’t done raising interest rates amid ongoing inflation pressures. The Fed has raised rates aggressively over the last year and a half to help cool inflation. Ebbing price pressures allowed officials to keep the federal funds target rate range at between 5.25% and 5.5% in September. Mester said the economy has proved to be stronger than expected at the start of the summer.

Persons: Loretta Mester, Lucas Jackson, ” Mester, Mester’s, Michael Barr, Michelle Bowman, “, ”, Mester Organizations: Cleveland Fed, REUTERS, Federal Reserve Bank, Cleveland Locations: U.S, New York, Cleveland

☆ ‘Immaculate disinflation’ is the new economic buzzword. But what does it mean?
▼ + stars: | 2023-09-06 | by ( Elisabeth Buchwald | ) edition.cnn.com time to read: +3 min

New York CNN —Economists added yet another term to their lexicon in recent months: immaculate disinflation. That pain tends to come in the form of a higher unemployment rate, which hampers economic growth. Yet the nation’s unemployment rate actually fell from 3.6% in June 2022 to 3.5% in July 2023. That’s leading some economists to believe that immaculate disinflation may be possible. “I wouldn’t call this disinflation immaculate,” he said in a CNBC interview at last month’s Jackson Hole Fed conference.

Persons: there’s, that’s, aren’t, Jerome Powell, Powell, Alex Wong, Joe Biden’s, Jared Bernstein, ”, Jackson, “, Bernstein, Loretta Mester, ” Mester, it’s, Mester Organizations: New, New York CNN, CNBC, Fed, White, Cleveland Fed Locations: New York, United States

☆ Fed's Mester: More hikes needed to bring inflation back down to target
▼ + stars: | 2023-07-10 | by ( Michael S. Derby | ) www.reuters.com time to read: +3 min

“The economy has shown more underlying strength than anticipated earlier this year, and inflation has remained stubbornly high, with progress on core inflation stalling,” Mester said in a virtual speech before a University of California, San Diego forum. Mester, who is not a voting member of the rate-setting Federal Open Market Committee this year, did not offer a time table for action. In her remarks, Mester said Fed actions were working to restore balance in the economy. But she also noted that inflation and the job market remain out of whack relative to where they need to be to cool price pressures. “Core measure indicates that inflation is stubbornly high and broad-based,” Mester said.

Persons: Loretta Mester, ” Mester, Mester, Jerome Powell, John Williams, ”, Michael S, Andrea Ricci Organizations: Federal Reserve Bank, Cleveland, University of California, Fed, New York Fed, Thomson Locations: San Diego

☆ Fed's Mester says rate target will need to go over 5%
▼ + stars: | 2023-04-05 | by ( Michael S. Derby | ) www.reuters.com time to read: +3 min

April 4 (Reuters) - Federal Reserve Bank of Cleveland President Loretta Mester said on Tuesday that the U.S. central bank likely has more interest rate rises ahead amid signs the recent banking sector troubles have been contained. The decision was haunted by banking sector troubles that led policymakers to say that a tightening in financial conditions would likely weigh on economic activity. "I was very comfortable with moving ahead” with the rate rise, given that authorities had taken steps to manage risks coming from banking sector troubles, Mester said in remarks following her speech. At the policy meeting, officials also penciled in a single additional rate rise for this year, as the Fed continues to boost the cost of short-term borrowing in a bid to lower inflation. Mester expressed confidence that banking sector woes should ultimately prove contained.

☆ Fed's Mester says hot inflation data affirms case for more rate hikes
▼ + stars: | 2023-02-24 | by ( Michael S. Derby | ) www.reuters.com time to read: +3 min

The government inflation report “is another indication that the impulse of inflation and price pressures is still with us. Mester spoke in the wake of the release of government data on incomes, spending and price pressures. “We just need to see all those prices coming back down and we haven't seen that sustainably yet,” Mester said. Since Mester called for a 50 basis point hike, jobs data has been very robust and inflation has been stronger than expected, suggesting her case for larger action remains in place. Mester reiterated in the interview that she still believes the federal funds rate, now at between 4.5% and 4.75%, needs to get above 5% and stay there to bring inflation down.

"It's going to take more effort on the part of the Fed to get inflation on that sustainable downward path to 2%." She is among the minority of Fed policymakers who back in December thought they would need to lift the policy rate to 5.4% to stop inflation, while most believed 5.1% would suffice. Similarly none of the other Fed policymakers who spoke Friday, including the normally hawkish Governor Christopher Waller and St. Louis Fed President James Bullard, focused on the fresh inflation data to argue for a more muscular Fed response, though all continued to signal more rate hikes would be required. And traders largely erased what had been consistent bets on Fed rate cuts towards the end of the year, pricing in a year-end Fed policy rate of 5.26%. "It looks like the Fed will have to be more aggressive," said Yelena Shulyatyeva, an economist at BNP Paribas.

☆ Fed's Mester says more rate hikes needed to combat inflation
▼ + stars: | 2023-02-16 | by ( Michael S. Derby | ) www.reuters.com time to read: +3 min

When the Fed met at the start of the month to deliberate on interest rate policy, it moderated the pace of what had been a torrid barrage of rate hikes and lifted its overnight target rate by quarter percentage point, to between 4.5% and 4.75%. The Fed signaled more rate hikes are coming to help lower overly high inflation levels back to the 2% target. Mester, who does not have a vote on the Federal Open Market Committee this year, noted she would have been open to a larger rate rise at the gathering. “It is welcome news to see some moderation in inflation readings since last summer, but the level of inflation matters and it is still too high,” Mester said. This will cool inflation and wage pressures and “as a result, I expect to see good progress on inflation this year,” the official said.

☆ Stocks slide as investors worry about more rate hikes
▼ + stars: | 2023-02-16 | by ( Paul R. La Monica | ) edition.cnn.com time to read: +2 min

Stocks tumbled Thursday morning after the US government’s Producer Price Index report showed that prices at the wholesale level rose faster than expected in January. The unwelcome inflation news comes just two days after the Consumer Price Index figures showed that retail prices continue to come in above forecasts. Investors also were unnerved by comments from Cleveland Federal Reserve president Loretta Mester about inflation and the economy. St. Louis Fed president James Bullard, another regional bank president who does not have a vote on the FOMC this year, is giving a speech this afternoon. Streaming media device maker Roku (ROKU) also soared following strong earnings.

☆ Fed's Mester says rates need to rise "a little bit" above 5%
▼ + stars: | 2023-01-18 | by ( Reuters Staff | ) www.reuters.com time to read: +1 min

A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration(Reuters) - The Federal Reserve needs to raise interest rates a “little bit” above the 5.00% to 5.25% range in order to bring inflation to heel, Cleveland Fed President Loretta Mester said on Wednesday, as she declined to disclose her preferred size of move at the upcoming policy meeting. “We’re not at 5% yet, we’re not above 5%, which I think is going to be needed given where my projections are for the economy,” Mester said in an interview with the Associated Press. “We’re beginning to see the kind of actions that we need to see,” Mester added. “Good signs that things are moving in the right direction ... That’s important input into how we’re thinking about where policy needs to go.”Fed Chair Jerome Powell tested positive for COVID-19 on Wednesday and is experiencing mild symptoms, the central bank said in a statement on Wednesday.

☆ Fed's Mester cheered by CPI, but says big risks remain on inflation
▼ + stars: | 2022-11-10 | by ( Michael S. Derby | ) www.reuters.com time to read: +2 min

She also isn’t sure how far the Fed needs to go with pushing rates higher, saying that depends on what happens with inflation, which remains high. Mester said the Fed faces a challenging trade-off between lifting rates too much or too little. The report drove many analysts to speculate that inflation trends are finally starting to moderate. Mester said the news was good on the inflation data but it’s just the start of what’s needed. Mester reiterated that market volatility and broader economic pain could result from the Fed’s efforts to bring inflation down.

Now some of those same policymakers are reaching for a more familiar lexicon dating from a time when rate hikes came in bland, quarter-point increments, not the 75-basis-point-per-meeting pace they've stuck to since June. It's one clear signal the U.S. central bank is poised to slow what's been the fastest round of rate hikes in 40 years to take stock of the impact of higher borrowing costs. It was a point seemingly lost on market participants, as U.S. stocks soared and traders priced in a lower peak for the Fed policy rate next year - 4.75%-5%, versus the 5%-plus level seen before the inflation report and the policymaker speeches. But even as she said the peak fed funds rate cannot be "predetermined," she noted that "some have argued" the Fed funds rate must at a minimum rise above year-ahead inflation expectations, currently running at about 5%. Philadelphia Fed President Patrick Harker for his part said he believes the Fed ought to pause once rates get above 4.6%, to gauge the effects of tighter policy.

☆ Fed's Mester says central bank has yet to make a dent in inflation
▼ + stars: | 2022-10-11 | by ( Michael S. Derby | ) www.reuters.com time to read: +4 min

“Despite some moderation on the demand side of the economy and nascent signs of improvement in supply-side conditions, there has been no progress on inflation,” Mester said. At its September policy meeting officials raised their federal funds target rate range to between 3% and 3.25% and penciled in more increases into next year, eyeing a 4.6% federal funds rate. The fed funds target was at near zero levels in March and recent Fed increases have been in increments of 0.75 percentage point, which is much larger in size than changes over recent decades. When it comes to the path the Fed has been on, "I don’t think it’s aggressive relative to where inflation is and how fast inflation has moved up." Mester said that inflation should come down to 3.5% by next year and back to the Fed’s 2% target in 2025.

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