Tags: federal reserve | mester | economy rate hike

Mester Sees Signs of Growth Bounce, Fed Can Tighten at Any FOMC

Friday, 01 May 2015 02:14 PM

Federal Reserve Bank of Cleveland President Loretta Mester said she sees signs the economy is rallying after a first-quarter slump and that “all meetings are on the table” for the first interest-rate rise in nine years.

“We’re getting close to the point where it’s going to be time to lift off, and now it’s going to be this decision based on the data,” Mester told reporters Friday after a speech in Philadelphia. “The first quarter of course was a disappointment, and now we’re assessing the data to see how much of that is transitory, which in my forecast most of it is.”

The FOMC, which has held the main rate near zero since December 2008, said in its policy statement Wednesday some of the headwinds holding back the U.S. will probably fade and give way to “moderate” growth. Her remarks are the first public comments from a policy maker since the meeting.

Mester, who doesn’t vote on policy this year, said she will look “very carefully” at the two jobs reports before the next Federal Open Market Committee meeting June 16-17. “I can be agnostic at this point and just wait for the data” to show whether the slowdown is transitory or if it’s “going to be a little more long lasting” in future reports, she said.

The world’s largest economy expanded at a 0.2 percent percent annualized pace in the first quarter, down from 2.2 percent in the previous three months, restrained by harsh winter weather and delays at West Coast ports. Growth will rebound to 3.1 percent in the second quarter, a Bloomberg survey of economists shows.

Private Wages

Mester saw some encouraging data in reports Thursday. Wages and salaries in the U.S. rose 0.7 percent in the first quarter. Private wages, which exclude government workers, rose 2.8 percent in the last year, the biggest gain since the third quarter of 2008.

“Some of the data that came out yesterday was a little bit better than people expected, so in that sense it looks like things are coming back a little bit, but we have quite a bit of data coming out between now and the June meeting,” Mester said.

Mester said she’s also looking for increased activity in manufacturing. “We know that got hit in the first quarter, partly because of the West Coast port strikes,” she said.

Should the rebound prove to be more permanent, she would back a rate increase at any gathering by policy makers.

“I’m going to go into each meeting with an assessment of the data that come in,” Mester said. “I’m not taking any of the meetings off the table.”

In her prepared remarks to a Fed conference Friday, Mester said improving consumer finances and the record wealth of American households are helping to support economic growth and push inflation back up to the central bank’s 2 percent target.

© Copyright 2020 Bloomberg News. All rights reserved.


   
1Like our page
2Share
StreetTalk
Federal Reserve Bank of Cleveland President Loretta Mester said she sees signs the economy is rallying after a first-quarter slump and that "all meetings are on the table" for the first interest-rate rise in nine years.
federal reserve, mester, economy rate hike
478
2015-14-01
Friday, 01 May 2015 02:14 PM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved