Mester Sticks To Hawkish Script

Comments from Cleveland Fed President Mester (’22 voter) filtered out during the NY-Asia crossover, as the hawk reiterated the need for further rate hikes, stressing her desire for policy settings to become restrictive and remain there for some time.

• Mester noted that there will be economic bumps along the way (expects unemployment to move higher, but not to 5%), flagging a resolute stance at the Fed when it comes to putting inflation back on the path to 2%, noting that now is not the time to be balancing risks
• She stressed that interest rates will not be coming down next year (sticking to the higher for longer mantra), with the Fed’s focus being to set monetary policy for the U.S.
• Mester also noted that the while Fed doesn’t set the value of the USD it needs to be aware of its impact on the U.S. economy.
• Mester is of the opinion that the Fed is doing a pretty god job when it comes to communicating policy direction.
• Finally, Mester pointed to a personal want re: discussions surrounding the potential sale of MBS, although noted that active discussions on the matter are not currently in play.
• These comments won’t move the needle for rates pricing given Mester’s well-known hawkish views and a lack of fresh, meaningful information in the comments.