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Cleveland Fed President Says It’s Still Too Early to Tell if May Rate Hike is Needed

Cleveland Federal Reserve Bank President Loretta Mester explained during an interview with Bloomberg TV on Wednesday that it is still too early to tell if the Federal Reserve will need to implement another interest rate hike in May.

Mester’s comments come a day after she delivered a speech in which she revealed that she envisions the Federal Reserve’s policy rate “moving above 5% and the real fed funds rate staying in positive territory for some time.”

At its policy meeting in late March, the Fed raised interest rates by a smaller-than-expected 25 basis points, from 4.75% to 5%. The central bank commented, however, that interest rates were nearing their peak following the outbreak of the banking crisis.

During their March policy meeting, Fed officials revealed that they expect one further interest rate hike to be implemented; pushing it to 5.1%. On the other hand, Fed officials do not expect any interest rate cuts until at least 2024.

With the Fed’s next policy meeting set to take place in early May, Mester explained that the Fed is still unsure of how long the ongoing banking turmoil will persist and its effects on the Fed’s policy decisions.

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