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Mester: March Probably Too Early For Rate Cut


Cleveland Fed's Mester ('24 voter retiring in June) says CPI hasn't really changed her view: the job isn't done yet and we need to finish the job. Highlights from her Bloomberg TV appearance:

  • Will assess conditions as they come in and really evaluate the risks around both parts of the mandate.
  • We don't want to see inflation progress stall out but this report doesn't suggest that's happening, it just suggests we've got more work to do and we're committed to do it.
  • On rate cut timing: It’s really going to be dependent on how the economy evolves. March is probably too early in mind because we need to see more evidence… the Dec CPI report just shows there’s more work to do which requires restrictive mon pol. But as we see more evidence that seeing sustainable downward path to 2% inflation, we can have conversation of whether it’s time to move the Fed Funds rate lower back towards a more neutral rate.
  • Business contacts: Hearing mixed views on pricing expectations. Input pricing pressures have eased, along with their ability to pass higher costs on. Some firms have been able to maintain pricing power but not as many. Wages haven’t come down that much but other input costs have.
  • Not hearing much at all on letting people go. There isn't the kind of staff reductions you'd expect if the economy was slowing materially.

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