Federal Reserve's Harker says February employment data was disappointing

Investing.com – Federal Reserve Bank of Cleveland President Loretta Mester said on Friday that February employment data was disappointing, but she noted that the overall economy is improving.

Mester told Bloomberg TV that the labor market is stabilizing. However, she pointed out that inflation remains above the target level, with little progress made over the past two years.

The Cleveland Fed president said that interest rates carry both upside and downside risks and indicated that current policy is roughly neutral. Based on discussions with banks and businesses, Mester stated that policy is not excessively restrictive.

Mester said the Fed should at least keep rates near neutral to reduce inflation and indicated that the central bank might maintain the current policy stance for quite some time.

The Fed official expressed her pleasure in working with the new chair and said that reducing the balance sheet is a topic the Fed should discuss. Mester also mentioned that Waller has talked about changing communication strategies and that new perspectives will foster good discussions.

Regarding the balance sheet, Mester said the issue lies in operating under a system of ample reserves or a scarcity reserves system. She added that asking whether holding government bonds or repurchase agreements is better is a reasonable question.

Mester stated that companies are not sitting on the sidelines amid uncertainty but are discussing hiring to meet demand. She described the economy as being in quite good shape.

Regarding oil prices, Mester said it is too early to judge the impact of recent increases. She pointed out that rising prices could put upward pressure on inflation but also downward pressure on consumer spending.

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