MNI BRIEF: Fed's Mester Sees 3 Cuts This Year, No Need To Rush

Cleveland Fed President Loretta Mester said Tuesday she supports three interest rate cuts for the year, unchanged from her projection in December, and said "there's no need to rush" to lower rates when the labor market and consumption data are so strong.

She told reporters on a call she's looking for a "continuation of the disinflation that we've seen, not necessarily the same pace, but just a continuation that inflation is moving down." A change in price setting behavior on the part of firms, which is already happening, is also important, she said.

Mester also expects to begin tapering QT later this year, after the FOMC discusses the timing and speed of such a move as well as the ultimate composition of assets on the Fed's balance sheet at its March meeting. "We can make the plan now and tie the timing to the metrics that we'll be looking for in terms of ON RRP, and the speed that seems conducive to making sure we don't bring the balance sheet down too far, but also allow it to fall to that efficient level." (See: MNI INTERVIEW: Fed Assets To Settle Near USD7T Post QT-Kaplan)