Loretta Mester, president of the Federal Reserve Bank of Cleveland, said that the US Federal Reserve should increase interest rates slightly this year. However, the regulator has time to assess the state of the economy and understand whether it is necessary to tighten borrowing conditions, Mester noted.
The head of the Federal Reserve Bank of Cleveland believes that economic and employment growth will continue this year albeit at a slower pace than last year. According to Mester, inflation will likely to stay near the Fed's 2 percent target.
"If the economy performs along the lines that I've outlined as most likely, the Fed funds rate may need to move a bit higher than current levels," the president of the FRB Cleveland summed up. At the same time, she acknowledged risks to the economy from slower economic growth in Europe and China, as well as ongoing trade negotiations between the United States and China. If some of those risks end up slowing the economy, the Federal Reserve will need to adjust the previous outlook and raise rates a little bit, Loretta Mester is sure.
