MNI BRIEF: Mester Sees No Compelling Case for 50BP Fed Hike

Federal Reserve Bank of Cleveland President Loretta Mester on Wednesday downplayed the likelihood of a half-point interest rate increase next month without entirely ruling it out.

"I don't think there's any compelling case to start with a 50bp hike," she told a European Economics and Financial Centre forum. Whethertostartwith a 50bp increase or doing consecutive quarter-point hikes is "somethingtotalkaboutand decide" at each FOMC meeting, she added.

In particular she is monitoring the supply chain, wage trends and long-term inflation expectations. "If I saw those rising, then, I would say that that's a reason to move at a faster pace of removing accommodation."

Policymakers must be "as clear as they can" in communicating with markets, and "we will be looking at" market pricing for larger moves in the Fed's benchmark rate, she added, in response to a question regarding rising market pricing for a 50bp hike.