“Financial markets could remain highly volatile as financial conditions tighten further; growth could slow somewhat more than expected for a couple of quarters; and the unemployment rate could temporarily exceed estimates for its long-term level.” term”, Mester told the Philadelphia Council for Business Economics.
“This will be painful, but so is high inflation”I consider.
Policy makers at the Fed have raised the official interest rate to a range of between 0.75% and 1%, and have begun this month to cut its balance sheet of almost 9 trillion dollars to put more pressure on the hike in borrowing costs.
Most Fed officials, like Mester, support raising rates by another percentage point adding up the next two Fed meetings, in June and July.
The outlook for September and beyond is less certain, and Atlanta Fed President Raphael Bostic has said there may be a pause in monetary policy tightening at that time to take stock of the economy and not overdo it. .
However, the statements by Mester and the Vice President Lael Brainard on Thursday suggest that the decision will focus more on the pace of the hikes, and not on whether to continue them or not.
Indeed, critics say the central bank has moved too slowly and warn that steeper rate hikes will be needed to stem price pressures, which could tip the US economy into recession.
Mester said he does not see the current situation as requiring the Fed to sacrifice a strong labor market for the sake of reducing inflation, but clarified that he sees recent surveys showing rising inflation expectations as a serious concern, and that he does not is convinced that inflation has peaked.
Source: Ambito
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