The U.S. economy can handle a rate hike, said Cleveland Fed president Loretta Mester, on Friday. In a speech prepared for delivery to The City Club of Cleveland, Mester said history will ultimately judge the Fed's unconventional actions since the financial crisis based on the U.S. central bank's ability to demonstrate that there is a way out. "The time to start that demonstration is quickly approaching," Mester said. Economic growth should rebound to a 2.5%-2.75% annual rate over the next 15 months, from the 1.5% rate in the third quarter, the Cleveland Fed President said. The labor market will continue to improve although the big 271,000 gain in October payrolls is unlikely to be repeated. Mester, who will be a voting member next year, also said she is reasonably confident inflation will move up to the Fed's 2% target.
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Stawk markets reacting predictably. The Fed's talk of an "ability to demonstrate there is a way out" = attempt at "credibility management." Nothing else.
ReplyDeleteI wonder what's been predicted more, this or Jesus coming back. With that in mind, I wonder which is more likely.
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