Fed’s Mester: Biggest policy risk is that Fed doesn’t hike rates enough

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Federal Reserve Bank of Cleveland President Loretta Mester reiterated on Tuesday that they are yet to make any progress on lowering inflation, as reported by Reuters.

Additional takeaways

“Monetary policy needs to be moved to restrictive levels.”

“Not expecting the Fed to lower rates in 2023.”

“Size of Fed rate rises will depend on economic conditions.”

“High and persistent inflation remains the economy’s biggest challenge.”

“Unemployment at 4.5% by end of 2023, move higher in 2024.”

“Expecting inflation to fall to 3.5% next year, to 2% by 2025.”

“Possible shock could tip the US economy into recession.”

“Job market still remains very strong, outstripping supply.”

“Fight to lower inflation is painful, but must happen.”

“Fed is committed to using all tools to lower inflation.”

“Expecting weak growth over next couple of years.”

Market reaction

The US Dollar Index stays under bearish pressure despite these hawkish comments and was last seen losing 0.43% on the day at 112.70.

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