Loretta Mester, Cleveland Fed, FED discussed on This Week


Now these minutes from the FOMC from their last meeting, it's wrapped up on February 1st, the central bankers announced a pretty modest 25 basis point hike in benchmark rates. The key, of course, is what policymakers see looking ahead. So what are we hoping to see this time? Well, ordinarily, you'd say you don't get that much from the minutes because it's three weeks old and we've had a lot of data since then, and we have had a lot of data that may have changed their views, and this week we got some of those views start to starting to change in public with Cleveland fed's Loretta mester, for example, saying that she thought that they should have done 50 basis points at that February 1st meeting. That would have been something we were looking for in the minutes. Well, let's hear a sound from Loretta mester right now. Why she says the case was made for a much bigger basis point hike. So at this juncture, the incoming data have not changed my view that we will need to bring the fed funds rate above 5%. And hold it there for some time to be sufficiently restricted to ensure that inflation is on a sustainable path back to 2%. Indeed, at our meeting two weeks ago, setting aside what financial market participants participants expected us to do, I saw a compelling economic case. For a 50 basis point increase, which would have brought the top of the target range to 5%. All right, Loretta mester there, and let's go back. Some of the things that you just talked about, these data points that really may have been exactly what she was referring to about better than forecast jobs report for January, better than forecast, Q four GDP, better than forecast retail sales for the same month. And how that may have influenced the fed in the last three weeks. It's going to be interesting to see how it might have influenced the fed because we've seen inflation come down a lot in November and December and then rebound in January and both the CPI and the PPI. And maybe it's telling us what the fed has been trying to tell us the inflation Genie is still not back in the model. It's going to take a while to bring that down and they need to do more for longer, raise rates higher for longer, which is something they've been saying for a long time. The real dichotomy seems to be on the growth side where many of these fed officials, including master, including Tom barkin earlier, saying that we think there's going to be a recession or darn close to it. Loretta mester said that business contacts in her district are preparing for one, and yet as you mentioned, the retail sales numbers and other signs of growth have come in fairly strong, so when does that happen? Right, and you spoke to Richmond fed president Barton just this past week and got some great insight from him. So let's listen to what he told you about fed rate hikes

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