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

(Bloomberg) -- 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.

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.

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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