The latest disappointing U.S. jobs number has not changed the overall economic picture and gradual rate hikes remain appropriate, Cleveland Federal Reserve President Loretta Mester said on Saturday.
The Fed raised rates in December for the first time in nearly a decade. But further tightening has proven hard to achieve, and most economists now see the next move in September.
“I still believe that in order to achieve our monetary policy goals, a gradual upward pace of the funds rate is appropriate,” Mester, a voting member on Fed policy this year, told reporters in the Swedish capital.
“The timing of actually when the rate hikes would occur and the slope of that gradual path is data-dependent.”
Fed policy-makers next meet on June 14-15 to decide on rates.
The U.S. economy added just 38,000 jobs in May, well below the consensus estimate of 164,000 and the smallest gain since September 2010.
“You can’t read too much into one number, but it is certainly part of the data that will be taken into account as we go into the June FOMC meeting and for the rest of the year,” Mester said.
“I think that the weak employment number has not changed fundamentally my economic outlook.”
In a speech, Mester also weighed in to the debate about the role of monetary policy in heading off financial imbalances saying the Fed should only resort to using interest rates if other more precise tools fail.