PITTSBURGH (Reuters) - The new Cleveland Federal Reserve Bank president said that the Fed is nearing its economic goals, though she would not specify when she thinks it should begin raising interest rates.
Loretta Mester, who became the head of the Cleveland Fed in June, was reluctant to commit to a calendar date on when the central bank should normalize its monetary policy.
“My view on this is that we are much closer to our goals than we have been in a long time,” Mester said, speaking to journalists after her first speech as the Cleveland Fed president. “I really, really think that rather than thinking in terms of a calendar time,” the Fed should focus on economic conditions to guide its stance on interest rates, she said.
In a question and answer session following her remarks at a local business community gathering here, Mester was asked whether she favored a discretionary approach to monetary policy. Republicans in the U.S. House of Representatives are pushing the Fed to adopt a rules-based approach to guide policy.
“I am a supporter of systematic monetary policy as opposed to discretionary,” she said. “But we don’t have one rule. I like to look at the outcomes of various rules. I don’t think we can look at one rule and set policy to that rule.”
Mester was also asked by an audience member on what explains the country’s low labor participation rate. Her response was that it was due to both cyclical and structural reasons.
Reporting by Michael Flaherty; Editing by Andrea Ricci