Federal Reserve's Mester: Need to Keep Interest Rates Unchanged for a While

BlockBeats News, April 16th, Federal Reserve's Mester said on Wednesday that high oil prices may push the year's remaining core inflation rate up by nearly a percentage point above the Fed's 2% target, and the Fed may need to keep interest rates unchanged. Mester said, "We are likely to see some pass-through of oil prices to core inflation," and by the end of this year, the key inflation measure will be "a bit below 3%, perhaps around 3%," with further upside risks.

Mester said the Fed may keep its policy rate in the current range of 3.50%-3.75% "for a period of time," while monitoring inflation, employment, and economic data in the coming months, a view shared by many of his colleagues. The impact of last year's tariff increases may gradually fade away this quarter, and housing price inflation is also easing. With the rise in oil prices, inflation rates in a range of service industries remain elevated, and if inflation begins to rise and potentially boost inflation expectations, he will be open to raising rates.

Mester also said the oil market is experiencing "the third negative supply shock in the past 12 months," coupled with higher tariff rates and stricter immigration rules, posing risks to the inflation outlook and the job market, which could weigh on economic growth. He believes this year's economic growth will slow but remain between 1.5% and 2% (FXStreet).