Federal Reserve's Harker Warns of Inflation Risks, Urges Caution in Withdrawing Restrictive Policies

Jinse Finance reported that Cleveland Federal Reserve President Loretta Mester said on Monday that with inflation still above the Fed's 2% target and remaining stubborn, the Fed needs to be "very cautious" when removing restrictive monetary policy. "I think we are only a short distance from the neutral rate, and if we remove this constraint on the economy, I worry about overheating again," said Mester, who is one of the most hawkish officials and does not have voting rights this year. She did not explicitly state whether she supports last week's rate cut. She emphasized that inflation remains her major concern, while the job market is still close to the Fed's maximum employment goal. Mester expects the unemployment rate may rise slightly this year but will decline again soon after. "In terms of inflation, we are further off target, missing by a full percentage point. And we have failed to meet the target for four and a half consecutive years, and are expected to continue missing it in the coming years."