Wants “several months” of inflation falling to call the peak

US economic outlook weakens, inflation likely to persist

“Risks to inflation remain strongly on the upside, especially in the midst of the continuing war in Ukraine and the potential that the zero-COVID policy in China will further disrupt supply chains. I will need to see several months of sustained downward monthly readings of inflation before I conclude that inflation has peaked,” Mester said in remarks to a monetary policy forum.

Inflation will need to lower for “several months” before the Federal Reserve authorities can securely close it has peaked, Cleveland Fed president Loretta Mester said Friday, adding she would be prepared to consider quicker rates climb by the September Fed meeting on the off chance that the data don’t show improvement. With expansive help for half-point rate increments at the Fed’s June and July meetings, Mester said this fall will be a pivotal time to take stock of whether cost increments are easing back from their current 40-year high or not – adjusting the pace of rate hikes accordingly.

“If by the September (Fed) meeting, the monthly readings on inflation provide compelling evidence that inflation is moving down, then the pace of rate increases could slow, but if inflation has failed to moderate, then a faster pace of rate increases may be necessary,” Mester said.

“With some luck, supply chain disruptions will begin to abate and labor market participation will continue to rise, helping to ease supply constraints and allowing supply in product and labor markets to come into better balance with demand. But we cannot rely on luck.”

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