Fed official: U.S. economy is on solid foundation and not considering hasty interest rate hikes

Cleveland Fed President Loretta Mester said on Monday (February 20) that the U.S. economy has a solid foundation and interest rates have not fallen behind. Regarding the economy, 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 play down 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, “Although the U.S. economy now has a solid foundation, all this is due to the Federal Reserve’s It was achieved through taking “extraordinary actions.””

She was reassured about the progress toward the goal, saying, “Interest rates are not lagging behind.” Regarding the economy, no one in the Fed is considering a hasty rate hike. The impact of the oil price shock and the strengthening of the US dollar is dissipating, and there is a greater awareness that global factors are affecting the United States.

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

As for reducing the balance sheet, Mester said, “It will take the Fed some time to reduce mortgage-backed securities so that Treasuries become a major component of its portfolio. 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 insulating 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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