Cleveland Fed President Mester: Rate cuts this year less likely, inflation risk higher
Yesterday, Cleveland Fed President Mester made an important statement, pointing out that the Fed's monetary policy is restrictive and expects inflation to fall back toward the Fed's 2% target, but this process will not be fast. She had predicted that the Fed might cut interest rates three times this year, but now she believes that this situation is no longer appropriate.
Mester said: "From the economic evolution I have seen so far, I think three rate cuts are no longer appropriate. Given the stagnation of inflation progress in the first quarter, inflation risks have risen, and frankly, the actual situation is stronger than I expected."
These words show that although the Fed's policy is already restrictive, the possibility of rate cuts in the short term is greatly reduced in the face of continued inflationary pressure. The market needs to prepare for a more persistent tightening policy to cope with the increase in inflation risks.
Summary:
Monetary policy restrictiveness: The Fed's current policy has already imposed certain restrictions on economic activities, but it is still necessary to continue to pay attention to inflation risks.
Slow progress in inflation: Although it is expected to fall back to the 2% target, the process is slower than expected, and long-term preparations need to be made.
Adjustment of interest rate cut expectations: Mester adjusted the original three interest rate cuts to no longer appropriate, reflecting the strength of the actual economic situation.
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