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Transcript

00:00:00
>> Several months now of weaker than expected inflation ratings has caused a split within the Federal Reserve. I'm Jonathan Spicer, Reuters Fed correspondent here in New York. I just sat down with Cleveland Fed president, Loretta Mester, who is among those Fed officials split. She is solidly on the side of those people who are not worried about this weakness in the data and she wants to stay the course with rate hikes.
00:00:26
>> You always have to think about where inflation's going. So you're right, we've had a couple of weak readings, but, again, I haven't seen that demand is shifting downward in a way that's gonna jeopardize that gradual upward of inflation. Because of that and because of where the economy is, and also the unemployment rate being low and labor markets doing well.
00:00:48
I still think that we need to pull back some of the accommodation in a gradual way. So the path that we've been saying is the appropriate policy at this point.>> Does narrow credit spreads and record high stock prices make you concerned in any way?>> you know, there's reasons for stock prices being high.
00:01:05
Part of its earnings, but also part cause of low interest rates, so the discount rate is low. You worry a little bit about the combination of that was low volatility and so you do have to take that seriously, and so that's part of the calculus as well. We have in it a very accommodative policy for quite sometime, we know there is a lot of liquidity out there.
00:01:26
Again, that argues for this gradual upward path to interest rates and pulling back some of that accommodation.>> Next year Mester will be one of the voters on the monetary policy at a time when potential President Trump could revamp all the personnel at the Fed. And she will likely be one of the people forging on with tighter monetary policy.
00:01:46
>> Okay.