(Finance) – “Regardless of the decision that will be taken in our next meeting, if the economy evolves as expected, in my opinion we will probably be near or at an interest rate maintenance pointas we accumulate more information on economic and financial developments and evaluate the effects of the tightening of financial conditions that has already occurred.” This was stated by the president of the Federal Reserve Bank of Cleveland, Loretta Mesterduring an event in New York.
The US central bank official focused on the jump in government bond yields observed in recent weeks. “Contractionary monetary policy is intended to tighten financial conditions, but theincrease in the nominal yield of Treasury securities 10 years after the last meeting it was greater than expected and reflects several factors,” he said, adding that “if sustained, rising long-term yields will help moderate demand and, as one of the financial conditions we monitor, will be one of the factors I will consider in assessing the appropriate path of monetary policy for the future”.
Mester also explained that, “as we calibrate policy to get the job done, both words and deeds will continue to be important” and “this is especially true because the economic environment is quite uncertain. events in the Middle East they are still in progress, adding uncertainty to what was already an uncertain geopolitical context”.
“It is too early to determine all the economic and financial consequences of the war for the global economy on the financial markets, but will have to be taken into consideration in charting the future path of monetary policy to achieve our dual mandate objectives,” he added.