Mester puts 75 basis point rate hike back on table for September

Cleveland Fed Chairman Loretta Mester on Friday put the possibility of a rate hike of 75 basis points back on the table for September.

Speaking at a European Central Bank conference, Mester said he expects to support 50 basis point rate hikes at each of the next two Fed meetings, scheduled for mid-June and late July.

Right now, the Fed can look around and check the right pace for new rate hikes, Mester said.

“If at the September FOMC meeting, monthly readings on inflation provide convincing evidence that inflation is moving downward, then the rate of rate hike could slow, but if inflation does not it has been possible to moderate, a faster rate of rate increase may be needed, “Mester said.

Thus, a rise of 75 basis points could come after the Fed meeting from 20 to 21 September.

Earlier this month, Fed Chairman Jerome Powell said a 75 basis point rate hike was not “actively considered” by the Fed.

But in an interview with Marketplace Radio on Thursday, Powell suggested he wasn’t taking such a big move from the table.

Economists said Powell was wrong to rule out such a move because it raises questions about the Fed’s willingness to regain control of inflation.

Mester is a voting member of the Fed’s interest rate committee and is considered one of the most counterfeited Fed regional presidents.

The Dow Jones Industrial Average DJIA,
+ 1.40%
rose nearly 1.5% on Friday after six days of losses.

The yield on the 10-year Treasury note remained below 3% for the fourth consecutive day.

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