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Fed’s Mester Calls Case for Gradual Rate Increases ‘Compelling’

  • U.S. economy is at full employment; inflation near target
  • Risks of financial instability must be considered seriously
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Can Jobs Report Shift the Debate on Fed's Rate Path?

Federal Reserve Bank of Cleveland President Loretta Mester said there’s a “compelling” case for gradually raising interest rates, with the U.S. economy approaching the central bank’s targets on employment and inflation.

“Policy has to be forward-looking,” Mester told reporters Thursday following a speech in Lexington, Kentucky. “If you have a forecast and inflation is moving up to your target and you’re at full employment, then it seems like a gradual increase from a very low interest rate is pretty compelling to me. Pre-emptiveness is important.”