Fed's Mester says 'each meeting is going to be in play' for rate hikes this year

cnbc.com:

Cleveland Federal Reserve President Loretta Mester laid out an aggressive plan for reducing easy-money policies this year, saying the central bank will be ready to hike rates at any meeting and should be looking at shedding mortgage-backed securities it is holding.

«Each meeting is going to be in play,» Mester said Wednesday at a virtual event hosted by the European Economics and Financial Centre. «We're going to assess conditions, we're going to assess how the economy's evolving, we're going to be looking at the risks, and we're going to be removing accommodation.»

Her comments come with markets widely expecting the Fed to raise its benchmark short-term borrowing rate at its March meeting. Traders are pricing in at least four more increases through the course of the year.

Mester said she sees a March hike lately but doesn't expect to raise the rate by more than 25 basis points, or a quarter percentage point, as is the norm. But she was emphatic that it's time for the central bank to start reversing the historically accommodative measures it took during the pandemic crisis.

«I don't like taking anything off the table,» she said. «I don't think there's any compelling case to start with a 50 basis point [increase]. Again, we've got to be a little bit careful. Even though you can well telegraph what's coming, when you take that first action, there's going to be a reaction.»

Mester is a voting member this year of the Federal Open Market Committee, which sets interest rates and other monetary policy measures. She noted she will be watching inflation closely. If it declines over the course of the year, that would lead to fewer rate hikes, while an acceleration would prompt more hawkish action.

Another big question for the Fed