Investing.com — St. Louis Federal Reserve president Loretta Mester on Thursday echoed other Fed members in saying that it will take longer to gain confidence to cut rates as the battle against inflation will be longer than expected.
“I now believe that it will take longer to reach our 2% goal than I previously thought,” Mester said, adding that further monitoring of incoming data will be needed.
“We will need to accumulate further data over the coming months to have a clearer picture of the inflation outlook,” Mester added.
The ongoing chorus of higher for longer interest rates comes against a backdrop of hopes that the deflation trend is back after the consumer price index for April slowed more than expected.
When the Fed does eventually cut rates, the cutting cycle will likely be gradual rather than aggressive, Mester suggested, as cutting rates by too much too quickly risks undoing the progress seen on inflation so far.
The St. Louis Fed president also said flagged the ongoing level of U.S. debt, saying while it isn’t an immediate issue it must be brought under control.
