Mester – Risks To Inflation Mandate Have Risen

Mester (’24 voter retiring in June) offers a hawkish take on yesterday’s CPI data, although with the market reaction likely limited by her retiring next month. Full remarks here.

• “I now believe that it will take longer to reach our 2% goal than I previously thought. Recent inflation readings suggest that risks to the inflation part of our mandate have risen.”
• “The lack of progress on inflation so far this year has been disappointing. Recent readings have not inspired greater confidence in me, and we will need to accumulate further data over the coming months to have a clearer picture of the inflation outlook.”
• “Analysis at the Cleveland Fed indicates that the past slowdown in wage growth will pass through to lower price inflation in core services and that the declines that have occurred in rents in new leases will pass through to slower inflation in housing services. Both of these effects will be needed in order to get back to 2% inflation, but they will take some time.”