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Stock Market going down: uncertainty over the #FED stimulus program

 

 

Marriner_S._Eccles_Federal_Reserve_Board_BuildingCleveland Federal Reserve president Loretta J. Mester reiterated on Friday that normalization of the US central bank’s monetary policy would be gradual as the economy continues to grow.

In a speech delivered in Florida, Mrs. Mester expressed her belief that the U.S. economy would be able to weather current headwinds and that inflation would drift back to the Fed’s 2% target for the medium-term.

“When oil prices and the dollar both regain some stability, and with inflation expectations remaining stable and economic growth continuing, it is reasonable to expect that inflation will move back slowly to 2 percent; it just might take a bit longer now, given the most recent decline in oil prices,”.

Mester noted that slow growth outside the U.S., dollar appreciation, more restrictive financial conditions, and the continued rebalancing of supply and demand in the energy sector were some of the current forces still impacting the economy and stated that they explained why Fed monetary policy would “likely need to remain accommodative for some time to come”.

Furthermore, Mester reiterated that economic projections constantly needed to be adjusted due to the wide range of deviation.

“Thus, the actual path normalization takes could very well turn out to be either less gradual or more gradual than what we anticipate it to be today,” she explained.

The Fed’s next policy decision meeting will take place on March 15 and 16 and will be accompanied by updated forecasts from its members as well as a posterior press conference with Fed Chair Janet Yellen.

M.L.

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