Central Banks
Fed Hawks See Possible Case for Returning to Larger Rate Hikes
- Mester says Fed must be prepared to move higher, hold longer
- Bullard says further rate hikes can help lock in disinflation
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Two of the Federal Reserve’s most hawkish policymakers signaled they may favor returning to bigger interest-rate hikes in the future, and said they saw the case for raising rates by a half-point at the central bank’s meeting earlier this month.
Cleveland Fed President Loretta Mester said Thursday she saw a “compelling economic case” for a 50 basis-point interest-rate hike at the Fed’s Jan. 31-Feb. 1 meeting, a view echoed by her St. Louis counterpart, James Bullard. Both officials also said policymakers need to be open to bigger rate hikes going forward if economic conditions warrant.