Cleveland Fed President Loretta Mester said overnight that three rate cuts may be appropriate this year, but called the possibility of fewer rate cuts necessary “a close call.”
Mester referred to the next meeting, scheduled for April 30 to May 1, and expressed that it was unlikely that enough information would be available to decide on a rate cut by then. But he left open the possibility of a rate cut in June, saying, “We have to rely on the data, so we don’t want to rule that out.”
Mr. Mester said the process of deinflation is simply taking a “temporary detour” or if there are signs that efforts to return inflation to the 2% target are stalling. He emphasized the importance of future data.
He cautioned against cutting interest rates too early or too quickly, warning that such measures could jeopardize progress in curbing inflation. “We have been moving forward on inflation to date by cutting interest rates too soon, or too early, without sufficient evidence to give us confidence that inflation is on a sustainable and timely path back to 2%,” Mester said. There is a risk that the gains made will be jeopardized.”
