Fed’s Mester Says Next Stage Is to See How Long Its Policy Needs to Remain ‘Restrictive’

© Reuters. FILE PHOTO: Cleveland Federal Reserve President Loretta Mester poses during an interview on the sidelines of the annual meeting of the American Economic Association in San Diego, California, U.S., January 3, 2020. REUTERS/ Ann Saphir/File Photo

(Reuters) – Cleveland Federal Reserve Bank President Loretta Mester said financial markets were “a little ahead” of the central bank on when to expect interest rate cuts, the Financial Times reported on Monday.

“The next phase is not when to cut rates, even though that’s where the markets are. It’s about how long we need to keep monetary policy tight to make sure inflation is on that sustainable and timely path back to 2%.” Mester said in an interview with the FT.

“Markets are a little ahead. They’ve jumped into the closing part, which is ‘We’re going to normalize quickly,’ and I don’t see that.”

(This story has been reworded to say “interest rate cuts” in paragraph 1, not “interest rates”).