Cleveland Fed President Loretta Mester “each meeting is going to be in play” regarding interest rate decisions. She added, “we’re going to assess conditions, we’re going to assess how the economy’s evolving, we’re going to be looking at the risks, and we’re going to be removing accommodation.”
On the idea of a 50bps rate hike in March, Mester said “I don’t like taking anything off the table.” However, “I don’t think there’s any compelling case to start with a 50 basis point”.
“Again, we’ve got to be a little bit careful. Even though you can well telegraph what’s coming, when you take that first action, there’s going to be a reaction,” she added.
On the topic of balance sheet runoff, Mester said, “I would support selling some of our mortgage-backed securities at some point during the reduction period to speed the conversion of our portfolio’s composition to primarily Treasuries.”
