Fed's Mester unmoved by global weakness, dollar rise: report

[October 14, 2014]  (Reuters) - The weaker global economic outlook and stronger U.S. dollar have not convinced Cleveland Fed President Loretta Mester to ratchet down her inflation or growth expectations, the U.S. central banker said according to a press report.

Mester, in an interview published in The New York Times, said she is "not too disturbed" that the Fed has been slow to boost inflation back to a 2-percent goal.

"I'd be more disturbed by the undershoot in inflation if it starts showing up in survey measures of inflation expectations. So far we have not seen that," she was quoted as saying.

Fed officials are increasingly taking note of weakness in the euro zone and in China, with some like Vice Chair Stanley Fischer saying it could affect the U.S. central bank's decision when to finally raise interest rates from near zero.

But for now Mester, who took the reins in Cleveland earlier this year and who currently has a vote on policy, said she is not yet adjusting her predictions of 3-percent U.S. growth over the second half of this year and next year.

"They're risks but I haven't really reduced my growth rates or changed my inflation outlook because of them," she was quoted as saying. "The appreciation of the dollar would have to be a sustained appreciation before I would want to change my outlook."

The policymaker sees the natural rate of unemployment, or the lowest level before wage pressure starts to boost domestic inflation, as about 5.5 percent. U.S. joblessness was 5.9 percent last month.

(Reporting by Jonathan Spicer Editing by W Simon)

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