FILE PHOTO: Cleveland Federal Reserve Bank President Loretta Mester speaks in London, Britain, July 2, 2019. REUTERS/Marc Jones
February 8, 2021
By Jonnelle Marte
(Reuters) – U.S. monetary policy will stay accommodative for a “very long time” because the economy is far from the Federal Reserve’s goals for maximum employment and price stability, Cleveland Fed President Loretta Mester said Monday.
“We’re going to be accommodative for a very long time because the economy just needs it to get back on its feet,” Mester said during a virtual discussion organized by the Toledo Rotary Club.
The policymaker repeated her view that economic activity could pick up in the second half of the year after most Americans have been vaccinated. But until then, fiscal aid that speeds up vaccine distribution and supports workers who are unemployed or underemployed could help stabilize the economy, Mester said.
While some inflation measures could rise in the near term, the shift is likely to be short-lived and just a reflection of the economic hit faced in the early months of the pandemic, Mester added.
Asked about the stock market volatility related to the recent trading of shares of the video game retailer GameStop Corp, Mester said she did not expect it to affect monetary policy.
Mester said she supports Treasury Secretary Janet Yellen’s efforts to work with regulators to make sure that investors are being protected.
“We want them to make sure the game being played is a fair game,” Mester said, adding that the U.S. central bank would continue to monitor for signs of excess in financial markets.
(Reporting by Jonnelle Marte; Editing by Chizu Nomiyama and Paul Simao)