![Cleveland Fed President Loretta Mester: We're not going to react to just one data point](https://image.cnbcfm.com/api/v1/image/107335194-17001597941700159791-32053950737-1080pnbcnews.jpg?v=1700159794&w=750&h=422&vtcrop=y)
Cleveland Federal Reserve President Loretta Mester said Thursday that this week’s news showing lower levels of inflation is not enough to convince here that the central bank has won its battle against higher prices.
“We’re making progress on inflation, visible progress. We need to see more of that,” Mester told CNBC’s Steve Liesman during an interview on “The Exchange.” “We’re going to have to see a lot more evidence that inflation is on that timely path back to 2%. But we have really good evidence that it’s progressed and now it’s just, is it continuing?”
In separate reports, the Labor Department said consumer prices were unchanged in October from the previous month, while wholesale prices actually fell 0.5%.
While the producer price index fell below the Fed’s 2% 12-month inflation target, the consumer price index was still at 3.2%, and even higher excluding food and energy, at 4%.
Following the reports, market prices in the futures market completely eliminated the possibility that the Fed would approve any further interest rate increases. Moreover, the market is now pricing in the equivalent of four quarter percentage point rate hikes next year, according to a CME Group gauge.
But Mester said she’s reserving judgment on where policymakers go from here.
“I haven’t evaluated that yet. Where I think we are right now is that we’re basically in a very good place for politics,” she said.
Comparing the Fed’s position to sailing a ship, Mester said, “We’re at the crow’s nest. What does the crow’s nest let you do? It allows you to look at the horizon and see where the data is coming from, where the economy is going. And then we’ll have to see: Is it moving in the way we envisioned?”
The Federal Open Market Committee meets next on December 12-13.
Mester, who gets a vote on the committee in 2024 but will step down midyear after meeting the Fed’s limit on time served, said she has not decided where she thinks rates should go.
“My sense is that it’s really not about cutting rates. It’s really about how long we stay in a restrictive stance and maybe have to go higher because of what’s going on in the economy,” she said.