Fed official worries about early rate cut

The Fed’s Mester said the bigger danger is cutting rates too quickly. Cleveland Fed President Loretta Mester worries about keeping rates high for too long rather than cutting them too quickly. In a speech Thursday, the central bank official said cutting too quickly is “the bigger mistake” than waiting too long to follow inflation’s path. The Fed targets 2% inflation, and Mester and other officials said progress is being made but they are not yet convinced they should ease. “Doing that would undermine all the good work that has been done to get inflation to this point,” Mester said in prepared remarks. “We don’t want to find ourselves in a situation where we undo some of the progress we’ve made on inflation by easing too early, potentially destabilizing inflation expectations and then having to reverse course. We don’t need to take that risk because labor markets and economic growth are so robust.” Mester is a voting member of the Federal Open Market Committee, which sets rates this year.