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Cleveland's Mester: No Need To Change Policy If 2021 Goes As Expected


Cleveland Fed Pres Mester comments in a speech "Moving Toward a Broad-Based Sustainable Economic Recovery in the U.S." that are largely in line with what she said a few days ago - basically looking for a weak H1 and a strong H2 and no change in policy.

  • Re the latter, she is looking for the Fed to begin tapering next year, though could be pulled forward to 2021 if the economy develops more strongly than she expects. Likewise, she wouldn't be in favor of easing policy if H1 economic weakness develops as expected.
  • The most salient paragraph in terms of policy expectations: " It is consistent with my view that based on my current outlook and assessment of risks around the outlook, it will be appropriate for monetary policy to be patiently accommodative. A slowdown in the economy in the first part of the year along the lines I am expecting would not require a change in monetary policy so long as the medium-run outlook remains intact. Nor would the strengthening in growth I expect to see later this year necessitate a change in our policy stance because I expect that the economy will still be far from our employment and inflation goals."
  • Link to full speech

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