Loretta Mester, Interview: Bloomberg TV

Fed Funds

“As I said, even before the March tensions in the industry, banking industry, the banks were pulling back and tightening credit standards, and that’s kind of normal, that’s the normal flow of monetary policy tightening throughout the economy, that’s one of the ways it gets pushed out into the economy. So that’s fine, that’s kind of what we are intending in terms of making sure that we can slow down demand so that we get a better balance between demand and supply and reduce those price pressures. And now we’re assessing whether the tensions in the banking industry have augmented that, and that’s part of what the evaluation will be as we go in to the next FOMC meeting, in terms of calibrating monetary policy.”

“I think we’re going to have to go a little bit higher from where we are, a little bit more and then hold there for some time in order to make sure that inflation is on that sustainable downward path to 2%.”

“Well, I see a little more inflation pressures than the median in the SEP (5.10%) … so I probably am a little bit higher than the median dot … My own view is that we’ll have to go above 5%, but exactly how much, precisely how much, and precisely how long it has to stay above, we’ve got to be open to allowing the economy to tell us.”

Inflation

“And my own forecast is that it will take some time to get inflation back down, but I think we’re going to make some appreciable progress this year and then continue to make progress next year and then hit 2% in 2025.”

“I’m about three and three quarters percent by the end of this year, continued progress next year, maybe two and three quarters, and then 2% in 2025.”