The President of the Cleveland Federal Reserve, Loretta Mester, recently stated that financial markets are too early to pay attention to interest rate cuts, and the news this week showing a decline in inflation levels is not enough to convince her that the Federal Reserve has won the battle against inflation.
We are making progress on inflation, and it is clear progress. But we still need to see more progress, "Meister said in a media interview on Thursday. We will need to see more evidence that inflation is returning to 2% in a timely manner. However, we do have sufficient evidence that inflation has made progress. The question now is, will inflation continue to decline
According to a report released by the US Department of Labor this week, the overall producer price index (PPI) in the United States increased by 1.3% year-on-year in October, lower than the Federal Reserve's target of 2%. The consumer price index (CPI) remained unchanged in October, with a year-on-year growth rate of 3.2%, better than expected. The core CPI, excluding food and energy, grew at 4% year-on-year.
After the above report was released, pricing in the futures market showed that investors had completely eliminated the possibility of further interest rate hikes by the Federal Reserve. In addition, according to an indicator from the CME Group, the market is currently betting that the Federal Reserve will cut interest rates by 100 basis points next year.
But Meister expressed reservations about the next step for policy makers. I haven't evaluated it yet. I think our current policies are basically in a very favorable position
We have significantly raised the federal funds rate, "Mester said, adding that officials can now" look to the future and see what the data is like and at what stage of economic development
Mester stated that easing monetary policy is not currently a topic of discussion. The real issue now is how long we need to maintain a restrictive stance, and considering what is happening in the economy, we may need to further raise interest rates
Since the end of July, the Federal Reserve has maintained its benchmark interest rate in the range of 5.25% to 5.5%. The next policy meeting of the Federal Reserve will be held from December 12th to 13th.
Meister holds FOMC voting rights in 2024, but will retire in the middle of next year after reaching the Federal Reserve's time limit. The Cleveland Federal Reserve issued a statement last week stating that it has started searching for a suitable candidate for Chairman and CEO to replace Messer.
Meister has been leading the Cleveland Fed since June 2014, and during her tenure, she has been one of the Fed's most hawkish voices.