Fed’s Mester says another rate hike in 2019 is possible

Says strong economic growth may warrant another increase

The Federal Reserve Bank of Cleveland President Loretta Mester said she expects strong economy may warrant another interest rate hike from the Federal Reserve in 2019.

In a speech given at the University of Delaware on Tuesday, Mester explained that she believes the funds rate may need to move “a bit higher” if the economy performs strongly, but said she’s willing to consider changing her outlook if the economy performs weaker than she expects.

“If the economy performs along the lines that I’ve outlined as most likely, the fed funds rate may need to move a bit higher than current levels,” Mester said. “But if some of the downside risks to the forecast manifest themselves, and the economy turns out to be weaker than expected and jeopardizes our dual-mandate goals, I will need to adjust my outlook and policy views.”

Mester’s remarks come shortly after the Federal Open Market Committee’s January meeting where it unanimously elected to not increase rates and vowed to be “patient” in its evaluation of the economy as the year goes on.

Mester, who is not a voting member of the Federal Reserve, said she expects the economy to continue expanding this year, but stated there is always a risk it could change.

“My expectation is that the economy will maintain its good performance in 2019, but with all economic forecasts, there are risks,” she said.

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