The Fed: Fed’s Mester says inflation is going to remain hard to predict

by | Sep 26, 2022 | Stock Market

It is going to be difficult for Federal Reserve officials to discern signal from noise about inflation given all the conflicting supply-and-demand factors influencing prices, Cleveland Fed President Loretta Mester said Monday. “We have to understand that inflation is going to be continuing to be hard to predict,” Mester said, in a talk at the Massachusetts Institute of Technology.

The Cleveland Fed president said the Fed hasn’t done a very good job of predicting inflation, and it is going to remain challenging. She mentioned the war in Ukraine, the global economic outlook and stresses in China’s economy as a few factors of uncertainty. In addition, there is consumer and business sentiment, and labor force and other supply factors. Mester said she was going to be “very cautious” before declaring victory over inflation, which remains at the highest levels in 40 years. “We can’t have wishful thinking replace really compelling evidence,” Mester said. “So before I conclude that inflation has peaked, I will need to see several months of declines in the month-over-month readings.” The Fed surprised the market last week by penciling in a terminal rate in the range of 4.5%-4.75% sometime next year. The Cleveland Fed president backed a highe …

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