Fed’s Mester: Monetary policy well-positioned following discernible progress on inflation

Cleveland Fed President Loretta Mester, in her remarks at a conference overnight, acknowledged that while inflation remains above Fed’s 2% target, there has been “discernible progress” in controlling it, even as the “overall economy has remained relatively strong”.

Mester expressed confidence in the current stance of monetary policy, stating, “Monetary policy is in a good place for policymakers to assess incoming information on the economy and financial conditions.”

Highlighting the need for flexibility, Mester described the central bank’s rate policy as needing to be “nimble,” and she believes that “the current level of the funds rate positions us well to do that.”

Mester did not rule out the possibility of further rate hikes, emphasizing that the decision to increase rates further and the duration for which the rate target remains high “will depend importantly on whether the economy is evolving as expected, how the risks are changing, and the progress being made on our dual mandate goals of price stability and maximum employment.”