(Adds Mester comments on Fed policy under next chair)
NEW YORK, Oct 20 (Reuters) - Cleveland Federal Reserve Bank President Loretta Mester on Friday said she is comfortable with the Fed’s approach to raising rates gradually, though she herself sees a slightly faster rate-hike path as appropriate.
“I’m comfortable with our policy gradually normalizing interest rates, which means an upward tilt to that policy path,” she told reporters after a speech here, adding that she would prefer a slightly steeper rate path, given that she sees slightly stronger economic growth ahead than most of her colleagues.
Mester is not a voting member of the Fed’s policy-setting committee this year, but will be next year, when the top job at the Fed may change hands in early February.
Fed Chair Janet Yellen’s term ends then. Although U.S. President Donald Trump on Friday suggested he may ask her to stay on, his spokeswomen said he was considering elevating Fed Governor Jerome Powell to one of the two top Fed posts, and appointing Stanford University professor John Taylor to the other.
Taylor, widely respected within and outside the Fed for his research on monetary policy, has advocated legislation that would require the Fed to follow an interest-rate setting rule that some Fed policymakers believe would lead to overly tight monetary policy in the current environment.
Mester, asked about tying policy to a rule, sounded unfazed. “Even if you pick a rule, the rule itself would need to be modified given the structure of the economy,” she told reporters. “I do think being systematic, looking at the kinds of information we look at systematically over time, articulating our strategy for policy and being less discretionary is a good idea.” (Reporting by Stephanie Kelly; writing by Ann Saphir; Editing by Chizu Nomiyama)