Former Cleveland Fed President Loretta Mester believes that the Federal Reserve may need to reevaluate its interest rate policy in response to recent inflation trends. Mester noted that although the latest Consumer Price Index (CPI) report met expectations, it indicated a pause in inflation progress, which could impact the Fed's future decisions. She called for a review of the policy path for next year due to continued economic momentum and inflationary pressures. Mester emphasized the possibility of higher inflation than previously anticipated, which may require a tighter policy stance. While the Fed initially projected four rate cuts in 2025, Mester now expects that number to be reduced to two or three. She suggested that the Fed could cut rates in December but should pause in January to reassess the situation. Mester also mentioned that reaching inflation targets may take longer and require more restrictive policy.



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