At their March policy meeting, most Fed policymakers signaled they expected to need to raise rates one more time, to 5.1%, and not to cut them until 2024. Mester has said she still sees "somewhat more persistent" inflation than the median forecast of her colleagues. On Wednesday, Mester noted that the Fed does not yet know the duration or magnitude of the recent banking turmoil which saw the collapse of two U.S. regional banks and the rushed takeover of Credit Suisse, adding to uncertainty on the economic outlook. However, acute stresses do not appear to have persisted, she said. "Businesses are preparing for some slowdown in the economy, but a lot of the firms are telling us their conditions are still pretty good," Mester said. "Credit quality is still fine. Bankers are telling us that isn't really a problem." (Reporting by Lindsay Dunsmuir; Editing by Bernadette Baum and Paul Simao)
(Adds quotes from interview)
April 5 (Reuters) - It is too early to know if the
Federal Reserve will need to raise its benchmark overnight
interest rate at its next policy meeting in early May, Cleveland
Fed Bank President Loretta Mester said on Wednesday, even as she
predicted rates will need to move higher.
"We have a lot more data to get to and we'll see as we get
there what is happening in the economy," Mester said when asked
in an interview on Bloomberg Television if a 25-basis-point rate
hike at the May 2-3 meeting was locked in.
Mester made her comments a day after she gave a speech in
which she said she saw the Fed's policy rate "moving above 5%
and the real fed funds rate staying in positive territory for
some time."
On Wednesday, she reiterated her stance on the need to "go a
little bit higher" to tame high inflation.
The U.S. central bank in late March raised its policy rate
by a quarter of a percentage point to the 4.75%-5.00% range, but
indicated it was near its peak rate after banking sector
troubles raised expectations of a further tightening in
financial conditions as lending standards become stricter.
Mester and her fellow policymakers are trying to bring
inflation back down to the Fed's 2% target rate without causing
a recession.
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