The Strategist

Fed assumes transition to lower rate hikes

11/22/2022 - 15:33

According to Cleveland Federal Reserve Bank President Loretta Mester, the U.S. Federal Reserve may start reducing the size of its interest rate increases as of next month in order to moderate inflation while enabling the economy to keep expanding.

"At the next meeting, I believe we can reduce the rate rises from 75 basis points. This is not a problem in my opinion, and I believe that such a choice would be appropriate," she remarked. "However, I also think that the state of the economy should dictate more pace rate hikes."

The Fed increased interest rates by 75 basis points earlier in November, marking the fourth straight hike.

Since that time, several Fed officials have said that they anticipate a slowing in the rate of increase in borrowing costs. This is important so that the economy can adjust to the most rapid tightening of monetary policy in the past 40 years.