Cleveland Federal Reserve Bank president Loretta Mester doesn’t think a recession will take place in the United States but believes it will take two years to get inflation back down to 2%. While speaking during an interview on Sunday, Mester explained that while it will take two years, inflation “will be moving down.”
A 2% Inflation Rate Will Take 2 Years to Achieve, Says Cleveland Fed President Loretta Mester
The president and CEO of the Federal Reserve Bank of Cleveland, Loretta Mester, spoke to CNBC in an interview on Sunday to discuss America’s issues with inflation and a slowing economy. Mester says growth is “slowing to a little bit below-trend growth” but she does not believe the United States will fall into a recession. “It isn’t going to be immediate that we see 2% inflation. It will take a couple of years, but it will be moving down,” Mester said during her interview.
Mester explained that the Federal Reserve will be looking for evidence that inflation is being tamed by the central bank’s policy. “We’re going to be looking for the month-to-month changes in inflation rates to get some really good evidence on whether we’ve seen inflation first stabilize and then begin to move back down,” Mester explained. “It is going to take a while to get inflation back down to 2%. But what we’re looking for is that we can see some moderation in demand, which has been incredibly strong.”
The Federal Reserve Bank of Cleveland president added:
Bringing it back in alignment with the supply side, which of course, as you know, has been constrained, alleviating some of that price pressures, getting inflation moving back down and on a sustainable path back to 2%, which is our inflation goal.
While Mester Is ‘Not Predicting a Recession,’ She Believes ‘Recession Risks Are Going Up’
When asked if the U.S. would head into a recession, Mester said she is “not predicting a recession.” The Cleveland Fed branch president said that growth was slowing, the unemployment rate was moving up “a little bit,” and the Fed is seeing American “households really shifting some of their spending.” The rate hikes the Fed has been implementing have already had an effect on the housing market, Mester noted. However, Mester said that the Fed needs to be cautious about tapering back the central bank’s policy.
Mester stressed:
We’re going to have to be very careful and nimble in how we approach this pulling back of this very…
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