11/16/2017

BANKING/FEDERAL RESERVE: “Federal Reserve Bank of Cleveland President Loretta Mester said Thursday [11-16-17] she believed inflation would continue to rise and eventually hit the Fed’s 2% target, making it appropriate for the central bank to continue gradually raising rates…
In a question-and-answer session following a presentation at the Cato Institute in Washington, D.C., Ms. Mester also noted the economy is growing strongly and the unemployment rate is at historic lows, she said. The Fed’s gradual pace of slowly raising interest rates is an attempt to strike a balance between a strong economy and weak inflation, she said…
In her prepared remarks, Ms. Mester said the long-term aging of the U.S. population will have a significant economic impact, including lower unemployment and growth rates, although its effect on interest rates is unclear.
Demographic changes will affect the way monetary policy is transmitted through the economy, she said. For instance, interest rate cuts could have less of an effect since there will be a smaller share of younger borrowers to take advantage of low borrowing costs. The share of older people, however, who tend to have more assets saved and who benefit from higher rates, will increase.”

-David Harrison, “Fed’s Mester Says the Central Bank’s Gradual Rate Path Is ‘Appropriate’,” The Wall Street Journal online, Nov. 16, 2017 10:33am