Fed Mester: Another hike needed as timing crucial in taming inflation

Cleveland Fed President Loretta Mester indicated her support for another rate hike, albeit with flexibility on its exact timing. “It doesn’t necessarily have to be September, but I think this year,” she commented on Saturday.

Mester’s focus was clear: Fed needs to bring inflation down to 2% target by the end of 2025. “The longer we let inflation remain above 2%, we’re building in a higher and higher price level,” she stressed, adding, “that’s why timely matters to me.”

Mester acknowledged that her stance in June favored rate cuts in the latter half of 2024. However, this could be subject to revision at the upcoming September rate-setting meeting, in light of the current inflation dynamics.

“I’m going to have to reassess that because, again, it’s going to be, how quickly do you think inflation is moving down?” she mused. “I do not want to be in a position of prematurely loosening policy.”