MNI BRIEF: Fed Should Not Ease Early - Interim St Louis Chief

The interim leader of the St. Louis Federal Reserve warned on Wednesday that monetary policy should not ease prematurely, and said if progress toward achieving 2% inflation stalls the Fed should act promptly.

"I’m optimistic that price stability will be achieved, but we’re not quite there yet. Policymakers should not declare victory and release the monetary brake prematurely," said Kathleen O’Neill Paese in a blog.

"If progress toward achieving 2% inflation stalls, I believe that the FOMC should act promptly to ensure that high inflation does not become entrenched," she said. "If the American public comes to believe that high inflation will persist indefinitely, the resulting loss of credibility would make restoring price stability harder to achieve and entail greater economic costs." (See: MNI POLICY: Fed Likely Done Hiking, Focused On Length Of Hold)