Economy

Cleveland Fed chair supports 75 bp rate hike in July

'There is more uncertainty about how far we'll need to go in order to rein in inflation,' says Loretta Mester

Ovunc Kutlu   | 29.06.2022
Cleveland Fed chair supports 75 bp rate hike in July

ANKARA

Cleveland Federal Reserve Bank President Loretta Mester said on Wednesday that she supports another 75 basis points of an interest rate rise in the Fed's next meeting in July.

"If conditions were exactly the way they were today going into that meeting, I would be advocating for 75 because I haven't seen the kind of numbers on the inflation side that I need to see in order to think that we can go back to a 50 increase," she told US network CNBC.

The Fed on June 15 increased its benchmark interest rate by 75 basis points, its steepest rate hike in 28 years, and Mester, who is a voting member of the Federal Open Market Committee (FOMC), supported it.

She said it is important to raise the federal funds rate higher in order to tame inflation, which hit a record high of 8.6% in May – its highest in more than 40 years. The central bank's target range is currently at 1.5%-1.75%.

"I think getting interest rates up to that 3-3.5%, it's really important that we do that, and do it expeditiously and do it consistently as we go forward, so it's after that point where I think there is more uncertainty about how far we'll need to go in order to rein in inflation," she said.

The Cleveland Fed chair stressed that the central bank's top priority is to get inflation under control, but noted that she also expects the unemployment rate to climb to 4.25% in the next two years.

Mester said on June 2 that faster rate hikes are possible in September if inflation fails to cool by that time.​​​​​​​

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