The Federal Reserve should raise interest rates gradually despite weak jobs data, Cleveland Fed president Loretta Mester said over the weekend after the US payrolls report erased the argument for a move in June.
US economic growth was picking up, inflation was moving towards target and the country was at full employment, Ms Mester told reporters in Stockholm on Saturday. “I still believe that in order to achieve our monetary policy goals a gradual upward pace of the funds rate is appropriate,” said Ms Mester – a voter on the policy-making federal open market committee who made the case in April in favour of gradual rate rises this year.
Recent comments from other officials prior to the report, including Fed chairwoman Janet Yellen on May 27th, had signalled they were in favour of a rate increase in coming months.
Analysts now expect that, in a speech today, Ms Yellen will indicate that a June increase is unlikely, but keep open the option of an interest rate rise later in the year. – (Bloomberg)