Cleveland Federal Reserve Bank President Loretta Mester said Thursday that the road to inflation, as reflected in the latest consumer price index statistics, returning to the Federal Reserve's 2% target rate is a difficult one. He said this meant it was likely premature for the central bank to cut interest rates in March.
“I think March is probably too early to expect a rate cut because I think we need to see more evidence,” Mester said in an interview with Bloomberg TV. “I think the December CPI report shows that there is more work to be done and that that work requires restrictive monetary policy.”
The central bank predicted in December that it would cut its benchmark overnight lending rate this year, but the timing and pace remain in flux as authorities analyze economic data.
Mester cited the need for “more progress” on the goods, housing and shelter categories in measuring inflation, as well as slowing wage growth.
Earlier Thursday, stronger-than-expected price pressures underscored the difficulty of reversing inflation as Americans pay more for shelter and medical care.
But investors still believe the Fed will begin lowering interest rates at its next meeting in March, according to a CME Group analysis of federal funds futures contracts.
The inflation figures follow closely watched monthly statistics. job report Last Friday's announcement showed that the labor market remains resilient, with employers adding 216,000 jobs in December and annual wage growth gradually increasing.
The Fed's next interest rate setting committee will meet from January 30th to January 31st, and the central bank is expected to keep interest rates unchanged at the current range of 5.25% to 5.50%.
