|
 Loretta Mester, president of the Cleveland Fed, told Reuters in an
interview she does not need to see clear evidence of inflation to
back more policy tightening after an initial rate hike in
mid-December. The Fed could act at any policy meeting, including one
later in January, she said.
After lifting rates for the first time in nearly a decade, the Fed
said further moves would be gradual and dependent on how the world's
top economy performs. The central bank last month forecasted four
rate hikes in 2016, based on the median projection of its 17 top
officials.
"I'm pretty comfortable with the median path ... I think that's not
a bad description," Mester, who votes on U.S. monetary policy this
year under a rotation, said on the sidelines of an American Economic
Association meeting.
"I'm probably a little steeper than that in the near term, just
because I have a higher growth forecast."
Mester expects the U.S. economy to grow at a 2.5 percent to 2.75
percent pace this year, slightly stronger than the 2.4-percent rate
median forecast of her colleagues. That optimism allows her to view
more than four rate hikes as appropriate, she said.
The comments from Mester, one of 10 voters on policy, suggests that
while she leans toward marginally tighter policy than Chair Janet
Yellen and others at the Fed, she may not be compelled to dissent.
"I think it's reasonable to move on a gradual path, and I'm going to
look at the data that comes in between now and the next meeting,"
she said.
Last month's rate hike from near zero was much anticipated but could
yet upset world financial markets as the Fed weighs when to make
another move. Traders in futures markets are predicting only two or
three hikes this year.
[to top of second column] |
Like most Fed officials, Mester, who has run the Cleveland Fed for a
year and a half, expects inflation to rebound as the effects of weak
oil prices and the strong dollar wane.
"I don't see anything in the data that has changed the dynamics of
inflation," she told Reuters.
Evidence of inflation is not necessary for her to back another rate
hike as long as her forecasts hold, Mester said. "Right now my
forecast is that we will gradually see inflation move back up to 2
percent."
The Fed's target for inflation, which has been below target for
years, is also 2 percent.
(Reporting by Ann Saphir and Jonathan Spicer; Editing by Dan Grebler)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
