Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Interest Rates

News : Interest Rates

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 

Mester Says Fed Should Raise Rates in 2018 at Pace Similar to 2017

share with twitter share with LinkedIn share with facebook
share via e-mail
0
02/13/2018 | 02:15pm CEST
By Michael S. Derby 

Federal Reserve Bank of Cleveland President Loretta Mester said Tuesday the U.S. central bank should press forward with interest-rate increases this year, while adding the recent wave of volatility in financial markets hasn't derailed a solid economic outlook.

"If economic conditions evolve as expected, we'll need to make some further increases in interest rates this year and next year, at a pace similar to last year's," Ms. Mester said in the text of a speech to be presented in Dayton, Ohio. "This gradual approach is the best strategy for sustaining the expansion and balancing the risks to our dual-mandate goals."

Ms. Mester is a voting member of the interest-rate setting Federal Open Market Committee this year. The Fed raised rates three times last year, moving its overnight target rate to a range of between 1.25% and 1.50%. It has penciled in around three increase for the current year. In recent comments Ms. Mester has expressed that she shares that outlook but may favor a slightly more aggressive course of rate increases.

Ms. Mester didn't comment on the timing of the next rate rises in her prepared remarks. Many in financial markets are eyeing the Fed's March meeting as the next time to act.

A "gradual upward path of interest rates will help balance the risks and prolong the expansion so that our longer-run goals of price stability and maximum employment are met and maintained," Ms. Mester said. Slow and steady rate increase will allow the Fed to respond to unexpected developments, allow inflation to rise while mitigating the chance asset markets will destabilize, and give the Fed more room to respond to future economic troubles when they arise.

The market's recent woes haven't affected Ms. Mester's outlook. "Trading has been relatively orderly, markets have remained generally liquid, and there hasn't been a pullback in credit," she said.

"While a deeper and more persistent drop in equity markets could dash confidence and lead to a pullback in risk-taking and spending, the movements we have seen are far away from this scenario," Ms. Mester said. "I expect the economy will work through this episode of market turbulence and I have not changed my outlook."

Ms. Mester said the economy is "sound" and 2018 looks "good" with growth of around 2.5%. The official reckons the recently passed tax bill will add about a quarter to a half percentage point to growth over the next couple of years, with the risk growth could be even stronger.

Both the monetary policy and financial conditions are "accommodative," and "the changes in tax policy will also have a positive effect on growth this year and next."

On the hiring front, Ms. Mester said "labor markets have been strong, and I expect that strength to continue," with what's now a 4.1% jobless rate falling below 4% this year.

Ms. Mester also expressed optimism that inflation will continue to mount, saying, "I expect it to gradually move up to our goal of 2% over the next one to two years."

Write to Michael S. Derby at michael.derby@wsj.com

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Interest Rates"
05:16pHousehold Borrowing Reaches Record $13.3 Trillion as Rising Rates Have Yet to Bite
DJ
03:43pCorrection to 'Missed Bond Payment in Xinjiang Stirs Chinese Debt Fears'
DJ
01:05pMissed Bond Payment in Xinjiang Stirs Chinese Debt Fears
DJ
08/13Argentina's Central Bank Raises Interest Rates amid Emerging-Market Turmoil
DJ
08/13Lloyds bank to raise interest rates on some savings accounts
RE
08/10U.S. inflation pressures rise in July; Fed on track to lift rates
RE
08/10UK banks should raise savings rates as 'matter of trust' - MP
RE
08/09U.S. Government Bonds Jump on Soft Inflation Data
DJ
08/09Chinese Lending Rates Drop Steeply To Three-Year Lows
DJ
08/08Foreign funds pummelled by Turkish bond rout, but have yet to exit
RE
Latest news "Interest Rates"
Advertisement