Fed’s Mester Says Jobs Report ‘Great’ But Fed Will Be Patient
(Bloomberg) -- Federal Reserve Bank of Cleveland President Loretta Mester said the better-than-expected March payroll report was “great” but that a lot more progress is needed to get the economy to where it was before the pandemic.
“It was a great report, it’s nice to see those numbers. We’re still almost 8.5 million jobs below where we were before the pandemic so we need more of those kinds of jobs reports coming out,” she said Monday in an interview on CNBC. It was the first public reaction from a Fed official to the jobs data, which was released on Friday.
Employers added 916,000 jobs last month, blowing past economists’ projections of a 660,000 increase. More widespread vaccinations, pent-up consumer demand and support from fiscal and monetary policy helped boost activity, Mester said. But the rosier outlook doesn’t mean the Fed should begin tightening policy anytime soon, she added.
“I think we need to be very deliberately patient in our approach to monetary policy and really focus in on hitting those goals that we have for monetary policy,” Mester said. “I’m thinking that we’ll see a very strong second half of the year but we’re still far from our policy goals.”
The Cleveland Fed chief, who in the past has been among the more hawkish of policy makers in being worried about inflation, is not a voter this year on the rate-setting Federal Open Market Committee.
The second half of the year is likely to be strong, and may cause temporary spikes in prices as economic activity returns in pandemic-suppressed sectors. But the inflation is unlikely to persist and the U.S. probably won’t see runaway price increases, Mester said.
Nor was Mester troubled by the recent run-up in Treasury yields, which she said were orderly.
“I’m not concerned at this point in the rise in yields. I don’t think there’s anything for the Fed to react to,” she said.
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