Fed's Mester: Markets are 'a little bit ahead' of central banks on rate cuts

<ul><li>The next phase is not when to reduce rates, even though that’s where the markets are at</li><li>It is about how long do we need monetary policy to remain restrictive in order to get inflation back to 2% target</li><li>Markets are a little bit ahead</li><li>They have jumped to the end part i.e. "we are going to normalise quickly", and I don't see that</li><li>Fed's policy settings are now in a good place</li><li>But you don't want to inadvertently become more restrictive than what you think is appropriate</li></ul><p>The full interview from the FT can be found <a href="https://www.ft.com/content/ad029db4-d758-49a5-a38a-e505956e6784" target="_blank" rel="nofollow">here</a> (may be gated). This echoes the comments from Williams on Friday. But it highlights a failure in communication by the Fed somewhat, in having to walk back Powell's press conference last week.</p>

This article was written by Justin Low at www.forexlive.com.