More Mester: Observing Deceleration in the Economy as it Rebalances

Cleveland Fed President Mester Discusses Rebalancing, Disinflation, and Neutral Interest Rates in a Slowing Economy

Cleveland Fed President Mester discussed the state of the economy in a recent Q&A session, noting some signs of slowing but overall seeing a rebalancing occurring. She also mentioned that disinflation can occur even in a strong economic environment. Additionally, Mester stated that she believes the neutral interest rate will not be as low as it once was and expects to see slower employment growth and a slight uptick in the unemployment rate while healthy labor markets should still be in place. However, she acknowledged that the average family is still struggling with inflation, which is affecting consumer sentiment.

Mester also mentioned that the Fed is working to ensure banks are prepared for the discount window and that commercial real estate risks for banks are manageable. In terms of the stock market, US stocks are lower but have rebounded from their lowest levels. The S&P index is down 51.17 points or 0.98% at 5192.39, with the 100-hour moving average at 5198.76. The Dow Industrial Average is down 463 points or 1.17% at 39103.40, and the NASDAQ index is down 214 points at 16182.

US yields have been mixed and have decreased from their highest levels

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