Mester Reiterates View Of 4+% Rates (Then "Hold It There") In 2023

Cleveland Fed Pres Mester's rate outlook (to above 4% in 2023 and hold there) in today's speech is in line with what she said on the sidelines at Jackson Hole. Markets are thus unmoved, though there is a Q&A session to follow. Full speech text here.

• The key passage on the monetary policy outlook: "My current view is that it will be necessary to move the fed funds rate up to somewhat above 4 percent by early next year and hold it there; I do not anticipate the Fed cutting the fed funds rate target next year. But let me emphasize that this is based on my current reading of the economy and outlook. While it is clear that the fed funds rate needs to move up from its current level, the size of rate increases at any particular FOMC meeting and the peak fed funds rate will depend on the inflation outlook, which depends on the assessment of how rapidly aggregate demand and supply are coming back into better balance and price pressures are being reduced."
• Nothing further on her expectation for the September FOMC apart from her comment "the size of rate increases at any particular FOMC meeting and the peak fed funds rate will depend on the inflation outlook"; as of last week she saw either a 50bp or 75bp hike in September.
• Reminder that MNI is hosting a livestreamed MNI Connect event with Mester on Sept 7 2022.