Cleveland Fed President Loretta Mester signaled her cautious approach towards interest rate adjustments. She emphasized her desire for the policy rate to reach a level where the next policy change could be equally a potential increase or decrease.
Mester stated at a conference today, “The approach I’m taking is that I would like the policy rate to get to a point where, when I’m thinking about what would the next policy change be, I want it to be equally a potential increase versus a decrease.”
Mester further clarified her stance, indicating that once the desired policy rate is achieved, she envisions a period of stability. “When we get the policy to that rate, I think we’re going to be holding for a while in order to make sure that the interest rate is coming back down. So I don’t put it in terms of a pause, I put it in terms of a hold.”
However, she noted that current data doesn’t suggest that this rate has been reached yet. Expressing a need for more evidence of inflation trending downwards, Mester insisted on the importance of adhering to the current policy strategy. She said, “I need to see more evidence that inflation is still moving down. I think that we just have to stick with what we’re doing.”