Fed's Mester On Board With November Taper, 2022 Rate Rise
September 24 2021 - 9:25AM
Dow Jones News
By Michael S. Derby
Federal Reserve Bank of Cleveland leader Loretta Mester said
Friday she supports the U.S. central bank beginning the process of
slowing its bond buying stimulus effort starting at the next
monetary policy meeting.
"In my view, the economy has met those conditions, and I support
starting to dial back our purchases in November and concluding them
over the first half of next year," Ms. Mester said in the text of a
speech.
Her comments on the Fed's now $120 billion per month in Treasury
and mortgage bond buying follow this week's Federal Open Market
Committee meeting. Then, Fed Chairman Jerome Powell also said the
November FOMC was a likely time to pare back central bank support,
saying "I think if the economy continues to progress broadly in
line with expectations, then I think-and also the overall situation
is appropriate for this-then I think we could easily move ahead at
the next meeting, or not, depending on whether" the Fed gets what
it wants to see on the job and inflation fronts.
At the Fed meeting, central bank forecasts also brought forward
expectations of a first central bank rate rise off near zero levels
to next year. Ms. Mester concurred with that view, saying "I expect
that the conditions for liftoff of the fed funds rate will be met
by the end of next year" assuming the recovery process
continues.
In her remarks, Ms. Mester said the resurgence of the
coronavirus pandemic will create a headwind to growth, but she
still expects the U.S. to book a strong 5.5% growth rate this year.
She sees the unemployment rate falling to 4.75% by the end of this
year and to 4% next year, and while inflation is now elevated
relative to the Fed's 2% target she expects price pressures to wane
over time.
Write to Michael S. Derby at michael.derby@wsj.com
(END) Dow Jones Newswires
September 24, 2021 09:10 ET (13:10 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.