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In
balanced comments that suggested she was poised to back a rate
hike soon, Cleveland Fed President Loretta Mester said she did
not dissent against the central bank's March policy decision due
to "limited" economic data on the first quarter.
And while the Fed is not yet "behind the curve," she said, there
is a risk in waiting too long to follow up on December's
0.25-percent rate hike.
"Waiting until every piece of data lines up in the correct way
means waiting too long and risks having to move rates up more
aggressively in the future, with negative impacts on our
economy," Mester, who has a vote on Fed policy this year under a
rotation, told the New York Association for Business Economics.
"The economy has shown considerable resiliency, and ... the
outlook and risks around the outlook will likely support gradual
reductions in the degree of accommodation this year," said
Mester, seen as hawkish but pragmatic on policy.
After tightening in December for the first time in a decade, the
Fed left policy unchanged two weeks ago in the face of an
overseas slowdown and early-year market turmoil. The next policy
meeting is set for April 26-27, followed by one June 14-15.
Mester said that, since December, she had slightly downgraded
her expectations for rate hikes this year though she did not
give a number. In a January interview with Reuters, she said she
backed four hikes in 2016.
Recent signs of inflation and robustness in the labor market,
including strong job gains in March, have encouraged Mester and
a handful of her colleagues to predict more tightening is around
the corner. Yet earlier this week, Fed Chair Janet Yellen pushed
back with cautious comments on looming risks to the U.S.
economy.
Published forecasts by Fed officials last month suggested two
more rate rises were on the way this year.
Mester, one of 10 voters on policy, said she marked down her
long-run expectations for economic growth and for unemployment.
This year she expects between 2.25 and 2.5 percent growth in the
world's largest economy.
"Despite financial market volatility, despite the pain inflicted
on the energy sector from falling oil prices, and despite the
relatively weak growth abroad, the U.S. economy has proven to be
remarkably resilient," she said.
(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)
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