FRANKFURT, May 23 (Reuters) - The U.S. Federal Reserve will continue to gradually normalise policy and whether it raises rates three or four times this year is a marginal issue, Cleveland Fed President Loretta Mester told German newspaper Boersen Zeitung.
“I think market forecasts are in line with the communication the Fed has given, which is also reflected in our projections,” Mester said in an interview. “The question of whether there will be three or four rate hikes in the end is, honestly, rather marginal from a macroeconomic or monetary policy perspective.”
She added three or four hikes would be in line with the Fed’s policy of gradual normalisation but if inflation fails to pick up as expected, the central bank could take a more cautious approach.
“If inflation picks up more or if the fiscal stimulus is reflected more strongly than expected, we will correspondingly adjust appropriately,” Mester said. “But if inflation does not pick up as expected, that’s an argument to wait longer and be more cautious.” (Reporting by Balazs Koranyi Editing by Matthew Mpoke Bigg)