US Fed's Mester: Further Rate Hikes Are Acceptable

Forex News

Loretta Mester (Cleveland Fed President) said that the Federal Reserve should continue a gradual approach to raising interest rates, given that inflation has not yet reached the goal of 2% of the US central bank on a sustainable basis. The politician also added that in her opinion, to achieve 2% of the inflation target will take several more years.

At its last meeting, which took place on May 2-3, the Fed kept the benchmark interest rate at 1.5-1.75%. On December 14, 2016, the Fed raised the base interest rate from 0.25-0.5% to 0.5-0.75%. This was the second increase after 2008. The decision was due to the improvement in the Fed's forecasts on unemployment, inflation, as well as US GDP growth.

Markets now expect the regulator to raise interest rates at the next meeting of the Fed's policy on June 12-13. According to analysts' forecasts, the rate will be increased by 25 basis points. Also, except this, two more increases are forecast until the end of 2018.