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More inflation progress needed before rate cuts - Mester

Published 06/14/2024, 09:52 AM
© Reuters

Investing.com - Progress is being made regarding inflation, according to Cleveland Federal President Loretta Mester, but more is needed before interest rates come down.

Mester, in an interview on CNBC, said the latest data on inflation has been welcome news, and the economy is starting to see inflation falling again after stalling earlier this year.

However, “we need to see inflation fall more from current levels,” she added, and she would want to see a few more months of ebbing inflation data before moves in interest rates become appropriate.

Data released on Thursday showed producer prices came in significantly lower than analysts had expected, dipping 0.2% in May on a monthly basis, while rising just 2.2% year-on-year. This followed Wednesday's cooler-than-expected CPI report.

That said, Mester was at pains to point out that it is important not to wait too long to cut interest rates, as "it is clear monetary policy is affecting the economy."

"We are in a good position with monetary policy," she added, and the "FOMC is doing good work understanding, and forecasting the economy."

The Federal Reserve kept interest rates unchanged at its latest meeting earlier this week, but the June dot plot–a collection of forecasts by the FOMC officials–showed a median projection of one rate cut in 2024, contrary to the two cuts that consensus had expected and the three cuts forecast in April.

 

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