“In my modal projection, to put inflation on a sustained downward trajectory to 2% and to keep inflation expectations anchored, monetary policy moves somewhat further into restrictive territory this year, with the fed funds rate moving above 5% and the real fed funds rate staying in positive territory for some time,” Mester said in the text of a speech for delivery before a group of economists in New York.
“Precisely how much higher the federal funds rate will need
to go from here and for how long policy will need to remain
restrictive will depend on how much inflation and inflation
expectations are moving down, and that will depend on how much
demand is slowing, supply challenges are being resolved, and
price pressures are easing,” she said.
(Reporting by Michael S. Derby; Editing by Lisa Shumaker)
