Fed governor sees ‘year of transition’ for economy, monetary policy at Lyons-UD forecast
February 19, 2019
Loretta J. Mester, who heads the Federal Reserve Bank of Cleveland says 2019 is a “year of transition” for the economy.
The native of the Baltimore area, who spent much of her career at the Federal Reserve Bank of Philadelphia, says the overall economy is in good shape and will continue to perform well this year.
Mester says the economy is expected to slow down, but remain solid.
She acknowledged risks that include trade policy, slower global growth and any negative change in consumer sentiment
Mester says she supports the Fed’s target of two to two and a half percent interest rates, while taking a wait and see stance on future rate increases.
Mester spoke at the annual economic forecast event that was sponsored by Lyons Companies and the Lerner College Center for Economic Education and Entrepreneurship.
Mester spent some time on the Fed’s need to clearly communicate with the public about the Fed’s actions and outlook.
She acknowledged that as part of the transition, the Fed will monitor economic trends, but may not respond to every jolt or uptick in the economy
Mester is not a member of the Fed’s Open Market Committee that sets interest rates. However, Fed governors serve as alternates on the committee and are part of discussions and their comments get attention from financial media outlets like Bloomberg.
Mester added the usual disclaimer that her views do not necessarily reflect those of the Federal Reserve, whose chairman Jerome Powell has been occasionally criticized for interest rate increases by President Donald Trump.
Mester was part of a panel that included Michael K. Farr, author, CNBC contributor and president of Farr, Miller & Washington, LLC, and Joan K. Woodward, president, Travelers Institute and executive vice president for public policy with The Travelers Companies, Inc. The panel will be moderated by Jon Hilsenrath, the chief economic correspondent for The Wall Street Journal. The event will be held in Clayton Hall on the UD campus in Newark.
Woodward, whose company insures small businesses and drivers, added a more somber note when she reported that small business confidence is down and a growing percentage of drivers are behind in their car and truck payments.
Investors should pay attention to trade negotiations with China, given the size and upward trajectory of its economy, which is slated to overtake the U.S.
Farr, a long-time speaker at the Lyons event, pointed to other negatives that include high national debt and inequity with a tiny percentage of Americans getting the bulk benefits of economic growth.
According to Farr, who acknowledged many of the attendees at the Newark event were Republicans and might disagree, the federal tax cut of last year was not needed and did not meet the goal of companies investing in plant, equipment and people.
Despite the headwinds, Farr says the outlook remains positive.
“You can’t bet against this country,” Farr concluded.