Cleveland Fed Pres. Mester is speaking on Bloomberg TV and says:

  • Monetary policy is restrictive.
  • Inflation progress stalled in first three months
  • April CPI report was good news, but too soon to tell what path inflation is on
  • Labor markets are becoming better balanced
  • Rebalancing labor market will put downward pressure on inflation.
  • We need to gather more evidence on inflation path to determine if it sustainably heading toward 2%
  • In the first part of the year risks that fit is too restrictive and went down.
  • Inflation risks are tilted to the upside.
  • I don't think about potential rate cut in terms of when.
  • Rate cut depends on progress with inflation.
  • Lack of progress on inflation was not welcome.
  • No risk in spending more time gathering data on inflation because the economy is strong.
  • Monetary policy is moderating demand, but not as fast as expected.
  • Still think inflation will come down.
  • But inflation won't come down quickly.
  • Policy is well-positioned for risks on either side.
  • If there is unforeseen deterioration on real side of economy, can cut rates.
  • Can hold rates or even raise them if inflation against expectations stalls out or reverses.
  • We have to be careful in monitoring the economy.
  • Neutral rate may be higher than thought before. I raised my estimate of it in March.
  • Previously I expected three rate cuts this year, I do not think that still appropriate.

Mester will be retiring as the Cleveland Fed president in June. As result, her comments are more of an outsider rather than insider.

I don't think any Fed officials are looking to do anything in June (right now), except to sit back Her comments are consistent with a Fed that is on hold, and Content in seeing more data given the strength of the economy and the risk of inflation perking up.