Fed official rules out May rate cut

Cleveland Fed President Loretta Mester said Tuesday that she is unlikely to support a rate cut at the Fed’s May meeting.

Mester, who is currently a voting member of the central bank’s rate-setting committee, said there is enough data by the Fed’s next meeting to determine that inflation is firmly on the way down toward its 2% target. He said he did not expect to receive any.

“Monthly inflation in January and February was more robust than in the second half of last year, reminding us of what we already knew: the process of deinflation will not be smooth back to 2%,” Mester said. It became something that made me want to do something.” he said in prepared remarks Tuesday.

Inflation has eased significantly over the past year and a half, but the numbers in January and February were better than expected.

Consumer prices rose 0.3% in January, up 3.1% from the same month last year. Prices rose 0.4% in February compared to the previous month, and rose 3.2% over the past year.

But Mester noted that he had previously expected the pace of disinflation to slow this year, and said the latest numbers did not change his overall outlook on inflation.

“We continue to believe that the most likely scenario is for inflation to continue its downward trajectory to 2% over time,” Mester said. “But we need to see more data to increase confidence.”

“Further monthly statistics would give us a better idea of ​​whether the disinflationary process has stalled, or whether the figures at the beginning of the year reflect a temporary detour on the downward path to price stability,” he said. You can do it,” he continued.

Mester said he doesn’t think there will be enough information before the next Fed meeting to determine where inflation is heading, but he expects the central bank to start lowering rates “later this year.” Ta.

Most traders do not expect the Fed to cut interest rates from the current range of 5.25% to 5.5% in May. However, according to the CME FedWatch tool, the Fed is pricing in a nearly 60% chance of a June rate cut.