Fed's Mester: U.S. monetary policy 'in a good spot'
COLLEGE PARK, MD. (Reuters) – The current stance of monetary policy is appropriate for the U.S. economy and the Federal Reserve should now wait and see how the economy evolves, Cleveland Fed President Loretta Mester said on Monday.
“We think that policy now is well calibrated to the economy and we are really going to be looking at the data going forward to see whether any adjustment is needed in that policy..so we’re in a good spot,” Mester said during an event held at the University of Maryland.
She is the latest U.S. central bank policymaker to emphasize the Fed is now on hold with interest rates. Mester added that she was against the interest rate cut the Fed voted in favor of at its last meeting in October but that it was a close call.
The U.S. Federal Reserve cut interest rates in July for the first time in a decade and followed that with a further two reductions at subsequent meetings in September and October.
Since then, Fed Chair Jerome Powell and others have made clear that they are now looking to keep interest rates unchanged over the coming months unless there is a “material” deterioriation in the U.S. economic outlook.
The moves had been characterized as a “mid-cycle” adjustment designed to offset headwinds to the U.S. economy from slowing global growth and the U.S.-China trade war, which has hurt manufacturing and business investment.
But fears that such weakness could spread to the wider economy have not materialized with the U.S. economy growing moderately, unemployment near a 50-year low and consumer spending, which accounts for roughly 70% of U.S. economic activity, still strong.
Mester has cited those strengths as evidence that the economy remains resilient in her reasoning for being against all three interest rate cuts this year.
The Cleveland Fed chief does not currently have a vote on interest rate policy but participates fully in deliberations. She regains a vote on the Fed’s policy committee next year.
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