© Reuters. FILE PHOTO – Cleveland Fed President Loretta Mester takes part in a panel convened to speak about the health of the U.S. economy in New York(Reuters) – The Federal Reserve should continue raising interest rates this year and next to keep the economy from overheating and financial stability risks from rising, a U.S. central banker said on Thursday.
Cleveland Fed President Loretta Mester, who votes on policy this year and leans towards being hawkish, said the central bank can speed or slow its “gradual” policy tightening if inflation unexpectedly spikes or if trade or geopolitical tensions, which she currently sees as risks to her outlook, worsen.
“If the economy evolves as I anticipate, I believe further gradual increases in interest rates will be appropriate this year and next year,” Mester said in remarks prepared for delivery at the University of Pittsburgh’s graduate school of business.
“Continued gradual reduction in monetary policy accommodation, given the economic outlook, will put monetary policy in a better position to address whatever risks, whether to the upside or to the downside, are ultimately realized,” she added.
Mester warned that rising government debt and deficits will reduce future productivity and longer-run growth, and that the current healthy outlook for the economy gives fiscal policymakers the breathing room to put the debt-to-GDP ratio on a downward path.
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Source: Investing.com
