Fed’s Mester: U.S. economy is on solid foundation, not considering hasty interest rate hikes

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FX168 Financial News (Hong Kong) News Loretta Mester, President of the Cleveland Fed, said on Monday (February 20), The foundation of the U.S. economy is solid, and interest rates have not lagged behind the economy. However, fine-tuning by the Federal Reserve (FED) may bring economic instability, and no one within the Fed is considering raising interest rates hastily.

She sought to downplay expectations for the Fed’s actions to promote economic growth, including expectations that it would promote investments that support productivity growth.

Mester said in a speech prepared for the Global Cooperation Center Conference in Singapore on Monday that “Although the U.S. economy now has a solid foundation, all this is due to the Federal Reserve taking “extraordinary actions.” It was achieved.”

She felt reassured about the progress in achieving the goal, and said, “Interest rates are not lagging behind the economy, and no one in the Federal Reserve is considering raising interest rates hastily. Oil price shocks and the strengthening of the U.S. dollar The impact is dissipating, and there is a greater awareness that global factors are affecting the United States.

Mester also pointed out that “the Federal Open Market Committee (FOMC)’s fine-tuning of monetary policy in response to market shocks may reduce , rather than improving economic stability. “She also added that the Fed’s policy can no longer do more to promote the U.S. labor market.

Regarding shrinking the balance sheet, Mester said, “The Fed will take some time to reduce mortgage support. Bonds, so that Treasury bonds become the main component of their asset portfolios. The expected eventual reduction in the size of the balance sheet may help prevent the Fed from being expected to meddle in the fiscal policy arena in the future.

In addition, she strongly supports isolating monetary policy decisions from short-term political considerations, saying that proposals to limit the Fed’s independence “would be a huge loss for the country.

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