Cleveland Fed President Loretta Mester said in a speech that she will be monitoring incoming data to determine if her baseline outlook of sustainable-growth remains intact. And for now, it’s “too soon” to make that determination. Hence, she said, “I prefer to gather more information before considering a change in our monetary policy stance.”
To be more specific, Mester added, “if I see a few weak job reports, further declines in manufacturing activity, indicators pointing to weaker business investment and consumption, and declines in readings of longer-term inflation expectations, I would view this as evidence that the base case is shifting to the weak-growth scenario. In this scenario, the economy’s short- to medium-term equilibrium interest rate would be moving down, and our policy rate could need to move down ”
