LONDON, July 2 (Reuters) - The Federal Reserve will take notice of financial market signals about the direction of the economy, although they are not always right, Cleveland Federal Reserve Bank President Loretta Mester said on Tuesday.
“The markets have priced in rate cuts, my interpretation is that they have put a lot of lean on that weak growth scenario,” Mester said at an event in London organised by the European Economics and Financial Centre.
“We don’t want to throw away what the market is telling us... You want to infer a signal from that but some of it is noise and some of it is signal, and the markets have shown they are not always correct about where the economy is going.”
In a speech earlier she had said the Fed should not cut rates until it has more information about whether the U.S. economy is moving to a truly weaker path.
Markets currently expect the Fed to cut rates for the first time since the financial crisis at the end of this month. (Reporting by Marc Jones and Navdeep Yadav Editing by Gareth Jones)