US economy now on 'sound footing': Fed's Loretta Mester

US economy now on ‘sound footing’: Fed’s Loretta Mester

International News

The US economy is on “sound footing,” a hawkish Federal Reserve official said on Monday in a speech that cautioned against asking the central bank to solve problems beyond its control such as low productivity growth. Cleveland Fed President Loretta Mester, at a forum in Singapore, did not comment specifically on interest rates. However she has dissented in the past in favor of quicker rate hikes and on Monday urged the Fed to focus on returning to a more normal policy footing, including trimming its $4.5-trillion bond portfolio. The Fed has raised rates twice in two years and expects to pick up the pace of tightening this year as unemployment, at 4.8 percent, has fallen to near an equilibrium level and as the Republican-controlled White House and Congress are expected to provide fiscal stimulus. The US economy is “now on sound footing,” Mester, who does not vote on monetary policy until next year, said in prepared remarks to The Global Interdependence Center. However, she said, “am very doubtful that monetary policy could be targeted to spur a strong pickup in the types of investment in human capital and physical capital that would raise productivity growth.”