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Fed’s Mester Expects Another Rate Hike, Says Cuts Have to Wait By Reuters

Fed’s Mester Expects Another Rate Hike, Says Cuts Have to Wait By Reuters

© Reuters. Loretta J. Meester, president of the Federal Reserve Bank of Cleveland, looks into Teton National Park where financial leaders from around the world gathered for the Jackson Hole Economic Symposium, just outside Jackson, Wyoming, S.

Written by Anne Safire and Howard Schneider

JACKSON HOLL, Wyoming (Reuters) – Beating inflation will likely require another hike in U.S. interest rates and then keeping them unchanged for a while, said Loretta Mester of the Federal Reserve Bank of Cleveland on Saturday. The bank may reassess its previous view that rate cuts could begin as late as 2024.

Although he does not want a policy so hard that it would cause the economy to collapse, he told Reuters in an interview on the sidelines of the Fed conference in Jackson Hole, Wyoming, that he wanted to set it up so that inflation would reach the Fed’s 2% target by 2020. End of year 2025 .

“We don’t want him to keep drifting away,” he said. Not only do rapidly rising prices impose a huge cost on Americans, he said; Allowing inflation to fester also makes the economy more vulnerable to future shocks.

“Whenever we allow inflation to stay above 2%, we build prices higher and higher,” he said, and that hurts US households. “And I think that’s why timing is so important to me.”

In June, most Fed policymakers, including Mester, thought they might stop raising interest rates when they reached between 5.5% and 5.75%, a quarter of a point above the current level.

(Reporting by Ann Saffer; Editing in Spanish by Juana Casas)

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