Comments from the Fed's Collins and Mester late Tuesday
Comments from the Fed's Collins and Mester late Tuesday, in a moderated discussion with Bostic, reinforced the " high-for-longer" rate stance. Mester, a voter this year, reiterated that she expects inflation to come down, but it will just take longer than she previously thought. Collins, a non-voter, rephrased that, noting it will take longer to see the progress on inflation necessary to begin easing policy. She added that there are some signs of policy restrictiveness in some data. There is an "elevated degree of uncertainty" on the economy, so policy needs to be well positioned. She said the underlying neutral rate may be higher in the medium term. Mester now believes 2024 growth will be above trend, versus her prior forecast of below-trend. It appears policy is less restrictive as she would have thought, though it is moderating demand. Bostic, a voter, noted the resilience in the economy and said it will take to make a decision on rates. All concurred that "patience" is the right policy course currently and Mester repeated her view that policymakers are "really not taking that big of a risk" in waiting. Indeed she said "this is all about risk management, appropriate risk management now."
