Fed to Be ‘Deliberately Patient’ on Asset Taper, Mester Says

Federal Reserve policy makers should be “deliberately patient” and wait to see more evidence that the U.S. labor market has made more progress before they consider cutting down their asset-purchase program, Cleveland Fed President Loretta Mester said.

“We want to be very deliberately patient here because, you know, this was a huge, huge shock to the economy,” Mester said in interview on CNBC Friday.

The Fed has committed to only begin scaling back the $120 billion monthly pace of its asset purchases after there’s “substantial further progress” on inflation and employment.

Fed to Be ‘Deliberately Patient’ on Asset Taper, Mester Says

Mester spoke just after a Labor Department report showed U.S. job growth picked up in May and the unemployment rate fell to 5.8%, signaling firms are making some progress filling a record number of openings as the economy powers up.

“I view it as a solid employment report,” she said. “But I’d like to see further progress.” Mester noted that the prime-age labor-force participation rate has yet to return to pre-pandemic levels.

Fed to Be ‘Deliberately Patient’ on Asset Taper, Mester Says

She said she was not overly concerned about inflation because she didn’t see wage increases feeding into higher overall prices.

Mester isn’t a voter on the rate-setting Federal Open Market Committee this year. Policy makers next gather June 15-16, making her remarks the last scheduled public word before they enter their traditional pre-meeting quiet period on Friday night.

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