Loretta Mester, president of the Cleveland Fed, who has the right to vote on monetary policy this year, reiterated her support for the Federal Reserve to raise interest rates in March on Wednesday (9th), but believes that the evidence for a 50 basis point (2 yards) increase in one breath in March is not convincing enough. On the same day, the Federal Reserve Bank of Boston announced that Susan Collins will serve as president, and she will have voting rights in the second half of this year.
Mestre said that due to supply chain bottlenecks that will slow down and the Fed is regarding to remove some support measures during the epidemic, the U.S. inflation rate will cool to a level above 2% later this year. She said: “Inflation is still at risk of rising, but the frequency and speed of the Fed’s interest rate increases will depend on the development of the economic situation. 」
Mestre has the right to vote on the Federal Open Market Committee (FOMC) this year. She reiterated her support for a March interest rate increase on Wednesday and said that every meeting following March will have the possibility of an interest rate increase. Everything depends on the intensity or slowdown of inflation, or the duration of inflation.
The Fed will meet from March 15th to 16th. The currency market is generally expected to raise interest rates by 1%, but there are also voices advocating a 2% interest rate increase in one breath.
Compared with the previous interest rate hike cycles, Mestre supports the Fed to raise interest rates faster this time, and in shrinking the balance sheet, she also advocates that the Fed must shrink its balance sheet faster than last time, and may consider selling some mortgage-backed securities (MBS).
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said on the same day that the U.S. economy may be regarding to reach the stage where inflation has peaked and fallen. The upcoming consumer Price Index (CPI) for January will show whether interest rates should be raised by 1 or 2 yards. He has no voting rights in the FOMC this year.
The new president of Boston Federal Reserve Bank will have the right to vote in the second half of this year
There are eight fixed members of the FOMC voting committee, and the remaining four seats are rotated by the presidents of the 12 regional FED banks. Among them, the vacant president of the Boston Fed bank will be finalized on Wednesday. Economist Collins will take over to replace Eric Rosengren, who was involved in a stock transaction dispute last year and has retired early. It is scheduled to take effect on July 1.
Collins will become the first African-American female president of a Federal Reserve bank in history. Alan Blinder, a former vice chairman of the Federal Reserve, said that she is a mainstream economist and will not be an outlier among voting members.
Collins received a Ph.D. in economics from the Massachusetts Institute of Technology (MIT) and is currently the provost of the University of Michigan. He has served on the Board of Governors of the Federal Reserve Bank of Chicago for many years. He also participates in the annual meeting of global central Banks held in Jackson Hole every year. He served as an economist for the White House Council of Economic Advisers (CEA) during the administration of George W. Bush.
At present, there are still three outstanding vacancies in the Fed. US President Joe Biden has nominated Sarah Bloom Raskin as vice chairman of financial supervision, as well as Lisa Cook and Philip Jefferson as directors.