Economic slowdown observed by More Mester, but signs of rebalancing present

Cleveland Fed President Mester Discusses the Current State of the Economy: Slow Growth, Disinflation, and a Neutral Rate on the Horizon

Cleveland Fed President Mester discussed the current state of the economy in a question and answer session. She mentioned that while there is some slowing in the economy, it is rebalancing. Despite signs of economic strength, disinflation can still occur. She also expressed her belief that the neutral rate will not be as low as it was previously.

Mester anticipates slower employment growth and a slight uptick in the unemployment rate, although healthy labor markets are expected to remain intact. She acknowledged that the average family is still struggling with inflation, which could explain the sour consumer mood. Mester highlighted the efforts of the Fed in ensuring that banks are prepared for the discount window and stated that commercial real estate risks for banks are manageable.

In terms of financial markets, US stocks were trading lower but had recovered from their lowest levels. The S&P index was down by 51.17 points or 0.98% at 5192.39, while the Dow Industrial Average was down by 463 points or 1.17% at 39103.40. The NASDAQ index had also dropped by 214 points to 16182.

US yields were mixed and had retreated from their highest levels. The 2-year yield was at 4.695%, a decrease of 2.3 basis points

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