Cleveland Fed President Loretta Mester said she expected unemployment rate to fall to 4.5% or lower this year, with GDP growth in 6-7% range. She emphasized, “my positive baseline outlook depends on appropriate monetary policy, which, in my view, will need to be very accommodative for some time to support the broadening of the recovery.”
“I wouldn’t consider the increase in inflation I expect this year to be the type of sustainable increase needed to meet the forward guidance on our policy rate,” she said. “So I expect to be deliberately patient unless there is clear evidence that inflation pressures will push inflation to exceed our desired path.”
“I need to see more improvement before I would consider the conditions of our forward guidance on asset purchases as being met,” said Mester.