Cleveland Fed's Mester Sees Potential for Rate Cuts Later This Year if Inflation Declines Further

Mester expects the Fed to begin cutting rates later this year as inflation declines further toward 2% target and economic growth and job markets remain solid.

Pace of rate cuts could be gradual if economy meets forecasts, but Mester needs to see further declines in upcoming inflation data to support policy easing.

June FOMC meeting is possible for first 2019 rate cut, but Mester does not yet have enough information to determine if cuts should begin then.

Mester revised up 2019 GDP growth forecast to just above 2% and expects higher unemployment rates ahead.

Mester increased her estimate of longer-run neutral fed funds rate to 3% from 2.5%, suggesting less monetary policy restraint than previously thought.