May job growth was “solid” but not enough to change the direction of monetary policy, Cleveland Fed President Loretta Mester told CNBC.
“The bottom line is I’d like to see more progress than we are now,” said CNBC’s Mester Steve Liesman during a live interview with Squawk on the Street on Friday.
The Department of Labor reported an increase of 559,000 non-farm jobs during the month, a sharp increase in normal times but still below the Dow Jones 671,000 estimate for an economy expected to accelerate out of the pandemic.
Despite the gains, Mester said the raise did not meet the benchmark for “significant further progress” set by the Fed before beginning policy normalization from the extreme adjustment of the Covid-19 era.
“I consider it a solid report,” she said. “I see it as continued progress on the work front, which is very good news. But I would like to see further progress.”
In an effort to keep the economic boom going, the Fed keeps short-term borrowing benchmarks near zero and buys at least $ 120 billion worth of bonds every month. This has happened despite the recovery of the nearly 15 million jobs lost during the pandemic and the unemployment rate falling to 5.8%.
Still, central bankers say they want to keep pushing until the economy approaches its pre-pandemic point, when the unemployment rate was 3.5% and 7 million more people were working than it is now.
“We want to be very patient here, because that was a huge shock for the economy,” said Mester. “We see now that we’re coming back, but again, it’s easy to close an economy, it’s much harder to bring it back.”
“We seek and base our political decisions on results of how close we are to achieving our goals with two mandates, what the economic data tell us. Instead of just having a forecast, we want to see it in the data. ”,“ She added.
Mester added that she remains largely unaffected by recent inflationary pressures, which have pushed the Fed’s preferred metric to 3.1% yoy growth, well above the central bank’s 2% target.
She and other Fed officials consider the jump to be temporary, largely driven by short-term bottlenecks and backlogs that are likely to resolve later in the year.
Mester is a non-voting member of the Federal Reserve’s Open Market Committee this year but will receive a political vote in 2022.
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