More Mester: Observing Deceleration in the Economy as it Rebalances

Cleveland Fed President Mester recently discussed the economy in a question-and-answer session, highlighting some signs of slowing but overall seeing a rebalancing occurring. She also mentioned that disinflation can occur even in a strong economic environment. Additionally, Mester stated that she does not believe the neutral interest rate will be as low as it once was and expects to see slower employment growth and a slight uptick in the unemployment rate while healthy labor markets should still be in place. However, she acknowledged that the average family is still struggling with inflation, which is affecting consumer sentiment.

Mester also discussed the Fed’s efforts to ensure banks are prepared for the discount window and manage commercial real estate risks for banks. In terms of the stock market, US stocks have rebounded from their lowest levels but are still lower than before. The S&P index is down 51.17 points or 0.98% at 5192.39, with the 100-hour moving average at 5198.76. The Dow Industrial Average is down 463 points or 1.17% at 39103.40, and the NASDAQ index is down 214 points at 16182.

US yields are mixed and have decreased from their highest levels. The 2-year yield is at 4.695%, down 2.3 basis points, while the

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