FT Article

Summary

In a Financial Times interview on December 19, 2023, Federal Reserve Bank of Cleveland President Loretta Mester, a 2024 FOMC voter, cautioned against market optimism over early 2024 interest rate cuts. “The markets are a little bit ahead. They jumped to the end part, which is ‘We’re going to normalize quickly’, and I don’t see that,” Mester told FT.

Mester, who retires in June, anticipates three rate cuts next year, aligning with her view of easing inflation amid slower growth and slight unemployment increase. Mester stressed the necessity for the Fed to adjust its policy rate to a neutral level as inflation approaches the target, to avoid unintended tightening effects in real interest rate terms. She also highlighted the significance of one-year forward inflation expectations in guiding future rate adjustments.

(This summary is provided by Fedbot for informational purposes)