Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Fed's Mester: Doesn't see financial stability problems for US

Economy Sep 29, 2022 11:21AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Loretta J. Mester, president and CEO of the Federal Reserve Bank of Cleveland, looks on at Teton National Park where financial leaders from around the world gathered for the Jackson Hole Economic Symposium outside Jackson, Wyoming, U.S., August 26, 2022.

By Michael S. Derby

(Reuters) -Federal Reserve Bank of Cleveland President Loretta Mester said Thursday she does not see distress in U.S. financial markets that would alter the central bank's campaign to lower very high levels of inflation through interest rate hikes.

While "no one knows for sure" if there is a big problem lurking in the financial sector right now, "so far, we haven't seen the kind of market dysfunction, even through what's happening in the global markets right now, we haven't seen that in the U.S. markets," Mester said in an interview on CNBC.

Mester touched on market conditions amid very unsettled conditions across the globe. She acknowledged that Bank of England actions this week to buy bonds to stabilize markets there appeared at odds with its work to lower inflation.

The BoE's actions appeared "a little bit incoherent because they were buying bonds at the same time they're talking about raising interest rates," Mester said. But she added there were "good reasons" for what the UK central bank did, saying "market functioning is incredibly important, because you won't be able to hit any monetary policy goals if the markets aren't functioning."

Mester, who holds a voting role on the rate setting Federal Open Market Committee, said she still sees inflation as the paramount problem facing the economy, which means the central bank needs to press forward with rate rises, lifting a federal funds target rate range now at between 3.00%-3.25% to over 4%.

The Fed has faced concerns that its aggressive rate hikes aimed at lowering inflation from 40-year highs will send the economy into recession. Financial markets have also been under broad pressure and suffered steep losses, and many observers worry Fed actions, coupled with rate rises from other major central banks, could trigger market dysfunction.

Mester said she does not see a case for slowing down on rate rises right now. She noted that at last week's FOMC meeting officials penciled in a path for the federal funds target rate that will get it to 4.6% next year and said she expects the central bank will likely have to go further than that.

"I probably am a little bit above that median path because I see more persistence in the inflation process," Mester said. Getting above a 4% fed funds rate is important to helping to lower inflation, she said.

Mester also said job market demand continues to outpace supply. She also said the strong dollar is a helpful force to lower U.S. inflation.

The central banker also cautioned against taking too much signal from data showing a decline in the nation's money supply. Some see the drop as a sign that future inflation levels will fall.

"Money supply hasn't been that reliable an indicator for a long time," Mester said. Measurements of the money stock are "not figuring into my calculus at the moment."

Fed's Mester: Doesn't see financial stability problems for US
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (7)
First Last
First Last Sep 29, 2022 12:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
"so far, we haven't seen the kind of market dysfunction, even through what's happening in the global markets right now, we haven't seen that in the U.S. markets," Mester said.  This is because the problems  (e.g., Russian aggression and CCP shutdowns) originated from outside the US.
John Hemphill
John Hemphill Sep 29, 2022 11:53AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
F3d unprecedentated r8 hikes not working, market fr33f@ll, Europe lost nrg supply, P00tin talking youcrane nooks, and joe doubling down. Blue skies ahead says F3d. Will this pass c3nsor or is fr33 spch done.
John Hemphill
John Hemphill Sep 29, 2022 11:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
This site is censoring legitimate comments.
John Hemphill
John Hemphill Sep 29, 2022 11:40AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The patients are running the assylum
David Beckham
David Beckham Sep 29, 2022 11:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Well do th ey really forget their economy depend on financial market?
Picaso Fish
Picaso_Fish Sep 29, 2022 11:37AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
it shouldn't but.... I understand if your going to go for fake growth it does. (That's what they did... fake growth)
Stephen Fa
Stephen Fa Sep 29, 2022 10:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The US debt is going to be unsustainable but Fed thinks US is fine.
First Last
First Last Sep 29, 2022 10:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
International norms have been respected less and less.  The US may eventually do selective sovereign default, probably if China invades Taiwan.
Stephen Fa
Stephen Fa Sep 29, 2022 10:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
America leads and set the norms. We are now infiltrated with leftists thinking delusionally socialism is the answer to general prosperity.
First Last
First Last Sep 29, 2022 10:10AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Stephen Fa   Trump disregarded norms the most, and he's more socialist than you think: "the Times also makes clear that Trump's father—and subsequently Trump himself—amassed a real estate fortune in large part by taking advantage of various government-backed real estate loans and subsidies."  --  reason.com/2018/10/08/trump-finances-subsidies-tax-fraud/
Angus Malarkey
Angus Malarkey Sep 29, 2022 10:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The Fed is always the last to figure out what's going on.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email