Fed’s Mester says next phase is to see how long its policy needs to remain ‘restrictive’ – FT

(Reuters) – Federal Reserve Bank of Cleveland President Loretta Mester said financial markets had got “a little bit ahead” of the central bank on when to expect interest rate cuts, the Financial Times reported on Monday.

“The next phase is not when to reduce rates, even though that’s where the markets are at. It’s about how long do we need monetary policy to remain restrictive in order to be assured that inflation is on that sustainable and timely path back to 2%,” Mester told the FT in an interview.

“The markets are a little bit ahead. They jumped to the end part, which is ‘We’re going to normalize quickly’, and I don’t see that.”

(This story has been refiled to say ‘interest rate cuts’ and not ‘interest rate rates’ in paragraph 1)