Fed Official Mester Signals Cautious Approach to December Rate Cuts as US Economy Poised for Early Next Year Rebound

Federal Reserve official Loretta Mester projected a sturdy rebound for the U.S. economy in early next year but warned against an aggressive path of rate cuts. She pointed to fiscal support, the lagged effects of prior policy moves, and ongoing regulatory easing as factors shaping the outlook. Mester reiterated that the current monetary policy stance is approaching a level that stops contributing to the inflation decline, stressing limited room for additional rate cuts without risking excessive accommodation.

With two rate cuts delivered this year, Fed policymakers vary on the extent of further loosening. Powell indicated last month that a December rate cut is not guaranteed. Since the Fed’s October meeting, several officials have endorsed pausing in December to contain inflation above target and preserve credibility over the policy horizon.