On Wednesday Eastern Time, Cleveland Fed Chairman Loretta Mester stated that US inflation has cooled, while economic activity and labor markets have slowed down.
This suggests that she may support maintaining interest rates unchanged at the Federal Reserve's December meeting.
As several Federal Reserve officials shift their stance towards a dovish stance in recent times, more and more market participants predict that the Fed's interest rate hike cycle may have come to an end.
Does the Federal Reserve's hawkish rhetoric shift?
Mester is one of the well-known hawks of the Federal Reserve. In the past two years, she has firmly supported interest rate hikes and is more inclined than other Federal Reserve officials to tighten monetary policy. Until October this year, Mester insisted that the Federal Reserve should keep interest rates high for a longer period of time and may still need to further raise interest rates.
However, nowadays, Mest's reputation has clearly softened a lot.
Although Mester did not explicitly express her support for the suspension of interest rate hikes in December, she emphasized that she is satisfied with the current level of fund interest rates and believes that the current price pressure in the United States has decreased while economic activity has slowed down. This can all be interpreted as a signal that she does not support further interest rate hikes.
&Amp; Quota; Monetary policy will need to be flexible and able to respond to constantly changing prospects, enabling us to achieve a dual mission; Quota; Mester said in his speech, "I believe that the current level of fund interest rates can already achieve this very well."
She also pointed out that although economic activity and labor markets remain more resilient than expected, they have also slowed down. In addition, she also believes that& Quota; Although the overall US economy remains relatively strong, inflation has made significant progress& Amp; Quota;
Mester said, "After decision-makers evaluate the latest information about the economic and financial situation and determine that policies have been well calibrated, they can use monetary policy to ensure that inflation returns to the 2% track in a timely manner."
Although Meister does not have voting rights in the Federal Open Market Committee (FOMC) this year, she will have voting rights in 2024. It is worth mentioning that in June next year, Meister's term as the President of the Cleveland Federal Reserve will end, and she is expected to step down at that time.
Does the Federal Reserve's pigeon sound gradually increase?
Mester's remarks also echo those of several other Federal Reserve officials earlier this week.
On Tuesday Eastern Time, Federal Reserve Director Christopher Waller stated that he is increasingly confident that policy interest rates can effectively lower price increases to the Federal Reserve's target. Federal Reserve Director Michelle Bowman stated that she is still willing to support interest rate hikes if the rate of inflation cooling stagnates, but she did not mention supporting interest rate hikes next month.
On Wednesday Eastern Time, Atlanta Fed Chairman Bostic also wrote in an article on his official website that he is increasingly convinced that inflation is firmly on the path of decline; Richmond Fed Chairman Barkin emphasized that the Fed should retain the option of further interest rate hikes to prevent inflation from becoming more stubborn than imagined.
Mester, like Bauman and Balgin, also retained the possibility of future interest rate hikes, stating that whether or not to do so "largely depends on whether the economy develops as expected, how risks change, and the progress we make in achieving the dual goals of price stability and full employment."
The last time Federal Reserve officials raised interest rates was in July, when they raised the benchmark federal funds rate to a 22 year high of 5.25% -5.5%. Since then, the Federal Reserve has decided twice in a row at FOMC meetings to remain silent and maintain interest rate levels unchanged. At present, the market generally expects that the Federal Reserve may start cutting interest rates around the middle of next year.