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Fed Mester Believes More Rates Hikes Needed

Tags: rate mester hikes

A Federal Reserve policymaker on Thursday repeated her call for further Rate hikes and a trimming of the central bank’s balance sheet later this year, as the U.S. economy is expected to rebound from what looks like a weak first quarter.

“If economic conditions evolve as anticipated, I believe further removal of accommodation via increases in the fed funds rate will be needed,” said Cleveland Fed President Loretta Mester, a hawkish policymaker who regains a vote on interest rates next year. “I would (also) be comfortable changing our reinvestment policy this year.”

The Fed raised rates in mid-March, its second policy tightening in three months. The central bank has also been topping up a $4.5 trillion portfolio of bonds amassed in the wake of the financial crisis, but plans to eventually begin shrinking it by letting the assets mature.

While the economy has been expanding at a 2-percent rate over the last few years, the Atlanta Fed’s GDPNow forecast predicts it dipped to 1 percent in the first three months of the year.

via Reuters

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Fed Mester Believes More Rates Hikes Needed


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