Cleveland Fed President Mester Talks Rebalancing Economy and Navigating Financial Markets Amidst Slowdown

Economic slowdown observed by More Mester, but signs of rebalancing present

Cleveland Fed President Mester discussed the current state of the economy during a recent question and answer session. She noted that while there is some slowing in the economy, it is rebalancing. Despite signs of economic strength, disinflation can still occur. Mester also expressed her belief that the neutral rate will not be as low as it was previously.

Mester anticipates slower employment growth and a slight uptick in the unemployment rate, although healthy labor markets are expected to remain intact. She acknowledged that the average family is still struggling with inflation, which could explain the sour consumer mood. To ensure that banks are prepared for any unexpected challenges, Mester highlighted the efforts of the Fed in ensuring that banks are ready for the discount window. Additionally, she stated that commercial real estate risks for banks are manageable.

In terms of financial markets, US stocks were trading lower but had recovered from their lowest levels. The S&P index was down by 51.17 points or 0.98% at 5192.39, while the Dow Industrial Average was down by 463 points or 1.17% at 39103.40. The NASDAQ index had also dropped by 214 points to 16182

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