Cleveland Federal Reserve president Loretta Mester said on Thursday that she thinks that the Fed will need to go above 5% and stay there for awhile. How far Fed goes above 5% depends on the data, she added. According to Mester, the U.S. January CPI report underscores there is still more to do on cooling inflation.
Mester revealed that she saw a compelling case for a 50 bps rate hike at the last FOMC meeting but refused to say if the Fed needs a bigger rate rise at the next FOMC meeting. "More upside inflation surprises could make Fed policy more aggressive," she noted.
Also, the official said that she expects growth to slow appreciably this year, but added that she doubts the need to cut rates later this year.