A top official at the Federal Reserve has warned that financial markets have jumped “a little bit ahead” by pencilling in early interest rate cuts next year, in the latest attempt by the US central bank to rein in the exuberance that has driven up stocks and bonds globally.
Loretta Mester, president of the Cleveland Fed and a voting member on the Federal Open Market Committee next year, pushed back on expectations that the central bank will abruptly pivot towards lowering borrowing costs now that it is more confident it has lifted its benchmark interest rate to a level restrictive enough to get inflation under control.
Her comments align with those from two other 2024 voting FOMC members — John Williams of the New York Fed and Atlanta’s Raphael Bostic — who on Friday stressed rate cuts were not imminent.