Economist's Insights

Cleveland’s Mester Sees Little Impact to “Very Sound” U.S. Economy from Recent Turmoil

Feb 13, 2018

Cleveland Fed President Loretta Mester (voter) became the latest official to go on the record with an expectation that the ramped up market volatility won’t shake the “very sound” fundamentals underlying the U.S. economy. Mester said, “While a deeper and more persistent drop in equity markets could dash confidence and lead to a pullback in risk-taking and spending, the movements we have seen are far away from this scenario, …I expect the economy will work through this episode of market turbulence and I have not changed my outlook. In my view, the underlying fundamentals supporting the economy are very sound. …If economic conditions evolve as expected, we’ll need to make some further increases in interest rates this year and next year, at a pace similar to last year’s [three-hike pace].” Mester was in the headlines again later Tuesday afternoon after the WSJ reported she was being considered for the open Fed Vice Chair position.