Federal Reserve Bank of Cleveland President Loretta Mester does not believe that a recession will occur in the United States, but believes it will take two years to return inflation to 2%. While speaking in an interview on Sunday, Mester explained that although it will take two years, inflation will “go down.”
It will take two years to reach 2% inflation, Cleveland Fed President Loretta Mester said
In an interview with CNBC on Sunday, Cleveland Federal Reserve Bank President and CEO Loretta Mester, U.S. inflation and the economic slowdown, she discussed the issue. Mester said that growth has “slowed to a little below trend,” but does not believe that the U.S. is in a recession. He said, “2% inflation is not going to happen anytime soon. It will take a few years, but it will come down,” Mester said in an interview.
Mester explained that the Federal Reserve will be looking for evidence that inflation is being controlled by central bank policy. Mester explained, “We’re going to look at the month-to-month changes in inflation to get really good evidence as to whether inflation first stabilized and then started to come down.” ‘It will take a while to get inflation back to 2%. But what we are looking for is that we can see some easing in demand, which has been incredibly strong.”
Federal Reserve Bank of Cleveland President added:
Of course, as you know, it is to match the supply side, which is constrained, to ease the upward pressure on prices, to lower inflation, and to get back to the inflation target of 2%, on a sustainable path.
While Mester “does not predict a recession,” he believes “the risk of a recession is rising.”
When asked if the U.S. is headed for a recession, Mester said he “does not anticipate a recession.” The Cleveland Fed manager said that growth has slowed, unemployment has risen “a little bit,” and the Fed sees American “households really shifting some of their spending. “The Fed’s rate hikes are already affecting the housing market, Mester noted. However, Mester said the Fed needs to be cautious about tapering back central bank policy.
It will have to be very careful and agile in how it approaches this very accommodative monetary policy pullback. It is more appropriate for the economy.
Of course, Mester’s remarks were criticized on social media, with somecomparing her remarks to the February 2008 statement by 14th Federal Reserve Chairman Ben Bernanke that he did not see a recession coming, and the 2008-2010 recession that followed his statement She compared it to the realizationMester, while not predicting a recession, stated that “the risk of a recession is going up.” The Cleveland Fed manager detailed that in addition to the Fed’s monetary policy and rate hikes, “there are other things going on.”
“The situation in Ukraine is a tragedy, but it really has led to soaring oil prices and soaring gasoline prices that everyone is feeling the brunt of,” Mester claimed. Still, Mester believes the U.S. central bank has what it takes to stabilize the economy and return inflation to 2%. He said, “We at the Fed are committed to using the tools at our disposal to get inflation under control and back to 2%. This is the primary challenge in today’s economy,” Mester concluded.
What are your thoughts on Cleveland Fed President Loretta Mester’s views on the U.S. economy? Do you think Mester’s opinion is correct or do you expect a U.S. recession? Let us know your opinion in the comments section below.
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