Fed's Mester: Labor market strong, inflation expected to rise to 2%

Author: Greg Michalowski | Category: Central Banks

Does not comment on interest rate rises in prepared remarks

She adds:
  • Backs beginning assessment of said framework later in 2018
  • smooth transition to new Fed leadership underway
  • economy back to normal, Fed policy normalizing
  • is open-minded on need to alter Fed policy framework
  • bars should be high for altering Fed policy framework
ECBs Coeur is speaking on the same panel  in New York.

He adds:
  • Stock effect of QE reducees need for new purchases
  • The amount of purchases needed to deliver a given compression of the term premium is likely to fall over time
  • With the current share of the bund free flow constituting already a small fraction of the total outstanding, additional purchases become less necessary to contain the term premium at low levels
  • In the future the euro system can retreat as buyer in the market without risking an unwarranted decompression of the term premium
I don't know about you, but Mester's comments are much simpler.

PS. Fed's George was not expected to be on the panel in NY but he is in the house.

He agrees with Mester that:

  • It's a good time to review Fed policy framework