MNI: Fed's Mester Sees Rate Peak Over 4% By June, Pause After

U.S. interest rates should peak a little above 4% in the first half of 2023 before they come back down, Federal Reserve Bank of Cleveland President Loretta Mester told reporters Thursday.

"I would pencil in going a bit above 4% as being appropriate," Mester said. "That trajectory is what I have in mind. Interest rates continue to rise this year and into next year for the first half, and maybe by then we pause," she added. "When we get up to a sufficiently high level where we've seen that compelling evidence (that inflation is coming down), we hold them there for a while, and then we can bring them back down as we get inflation closer to goal."

Compared to when the Fed met in June, Mester said she was inclined to "frontload" the hikes more even if the end point doesn't change. For the next move in September, "it's not unreasonable to think that we might have to do a 75 but I can imagine it could be a 50," she said.