WSJ Interviews Cleveland Fed’s Mester; Fed’s Jefferson Says Inflation Target Should Stay As Is; ECB Rate-Rise Bets Hit New High

The Wall Street Journal recently interviewed Loretta Mester, President of the Federal Reserve Bank of Cleveland, and Federal Reserve Governor Philip Jefferson on inflation, interest rates, and the European Central Bank. This article will discuss their comments and the impact of the recent inflation data from France and Spain.

Transcript: WSJ Interview With Cleveland Fed President Loretta Mester

Federal Reserve Bank of Cleveland President Loretta Mester spoke with Wall Street Journal reporter Nick Timiraos in New York on Feb. 24 on the sidelines of a monetary policy conference. She discussed the path of potential interest rate increases and the outlook for employment and inflation. Here is a partial transcript of the interview, lightly edited for clarity and length.

Fed’s Jefferson Doesn’t Back Raising 2% Inflation Target.

On Monday, one of President Joe Biden’s new Federal Reserve appointees said he doesn’t support raising the central bank’s 2% inflation target. In a talk to students at Harvard University, Fed governor Philip Jefferson said raising the inflation target “would damage the central bank’s credibility,” adding that changing the target would “introduce an additional risk by calling into question the [Federal Open Market Committee’s] commitment to stabilizing inflation at any level because it might lead people to suspect that the target could be changed opportunistically in the future.”

ECB Interest-Rate Expectations Hit New Highs After Hot Inflation Data

Data released Tuesday showed French consumer prices were 7.2% higher in February than a year earlier, accelerating from the 7% rise in January. Meanwhile, Spanish consumer prices rose by 6.1% this month, up from a 5.9% inflation rate in January. Both February readouts topped economists’ expectations. As a result, investors expect the European Central Bank to lift its key deposit rate to 3.85% by November, Tradeweb data shows. The record high for the deposit rate was 3.75% in 2001; it currently sits at 2.5%.

U.S. Economy Pentagon to Reap Rewards From $53 Billion Chips Act

The Pentagon will have access to leading-edge semiconductors made at facilities receiving funds from the $53 billion Chips Act, Commerce Secretary Gina Raimondo said, ensuring the military can be supplied with advanced chips.

As Black-Owned Banks Fade Away,…

The number of black-owned banks in the U.S. has declined steadily since the 1980s, leaving black communities without access to capital and other financial services. This has led to an increase in financial insecurity and economic inequality among black communities, as well as a decrease in the number of black-owned businesses.

Related Facts

• The Federal Reserve Bank of Cleveland President Loretta Mester said that inflation risks remain on the upside.
• Federal Reserve Governor Philip Jefferson said the central bank should not raise its 2% inflation target.
• Inflation accelerated in France and Spain, leading investors to raise bets that the European Central Bank will raise interest rates to a record high.
• The Pentagon will have access to leading-edge semiconductors made at facilities receiving funds from the $53 billion Chips Act.
• The number of black-owned banks in the U.S. has declined steadily since the 1980s.

Key Takeaway

The Federal Reserve Bank of Cleveland President Loretta Mester, Federal Reserve Governor Philip Jefferson, and the European Central Bank have all recently addressed the topics of inflation, interest rates, and the economy. The inflation data from France and Spain have increased pressure on the ECB to raise interest rates, while the Chips Act will provide the Pentagon with access to leading-edge semiconductors. In addition, check-owned banks have declined steadily since the 1980s, leading to financial insecurity and economic inequality among black communities.

Conclusion

The Federal Reserve Bank of Cleveland President Loretta Mester, Federal Reserve Governor Philip Jefferson, and the European Central Bank have all recently addressed the topics of inflation, interest rates, and the economy. The recent inflation data from France and Spain have increased pressure on the ECB to raise interest rates, while the Chips Act will provide the Pentagon with access to leading-edge semiconductors. Additionally, the decline of black-owned banks has led to financial insecurity and economic inequality among black communities. The Fed and ECB have important decisions to make in the coming months that will majorly impact the economy.