Loretta Mester, president of the Cleveland Federal Reserve Bank, said she would like to see further job growth in the coming months before assessing whether the US economy has made "substantial further progress" needed to reduce the size of its debt purchases.
"We have made a lot of progress," Mester said. I would like to see further progress, especially with regard to the labour force participation rate.
"I think things will become clearer as we spend the summer and enter September," Mester said. The start of school in September will help ease some supply constraints in the labour market, and supplementary unemployment benefits will expire.
She said she would not disclose her views in the bitmap, but she predicted that the economic growth rate this year would be much higher than the trend level of 6%. The unemployment rate will fall below 4% next year, and the inflation rate will be 3%, 3.5% this year and about 2% next year.
"I think we are on a good policy path," Mester said. It is true that there should be a discussion around the asset purchase plan, as this will be the first adjustment. Then we will see how the economy develops. Then consider the interest rate path after that.
Even if it is "the most radical forecast in the bitmap, we think it will be some time before we consider adjusting interest rates," she said.
Mester does not have the right to vote on the Federal Open Market Committee this year.