Cleveland Fed President Loretta Mester.
[Financial Channel/Comprehensive Report] Cleveland Federal Reserve Bank President Loretta Mester said on Tuesday (4th) that there are signs that the recent banking problems have been brought under control, and the Fed may raise interest rates further.
Mester made the remarks during an event Tuesday with money market experts from New York University.
She also noted that in order to keep inflation down to 2 percent and keep inflation stable, she believes interest rates need to move into "restrictive territory" this year, with the federal funds rate above 5 percent for some time.
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Exactly how much the federal funds rate needs to rise now, and for how long it remains restrictive, will depend on how much inflation and inflation expectations have fallen, Mester explained.
The Federal Reserve raised interest rates by 1 yard at the end of March, and the interest rate came to a range of 4.75% to 5%. Although a series of bank failures caused financial market shocks, Mester said that she was very satisfied with the Fed’s 1 yard hike in March , and so far, banking problems seem to have stabilized, she thinks it is appropriate to continue raising interest rates.
Mester has no vote this year on the policy-making Federal Open Market Committee (FOMC), though she also does not expect the Fed to cut rates this year.
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