Federal Reserve Bank of Cleveland president Loretta Mester said on Monday that she continues to believe that the Fed needs to remain open to mortgage bond sales (MBS) as part of its ongoing efforts to shed the size of its balance sheet.
She highlighted that she does not think it’s immediate that the Fed's policymakers should be selling mortgage bonds but, eventually, they may want to. The official added that the Fed needs to educate the public on why that might happen as there may be losses for the central bank on some of those bonds.
Mester also said that, in her opinion, the monetary policy is in a good place to deal with how the economy might perform. However, Cleveland Fed president added that if the U.S. economy performs as expected, then it will be reasonable to begin moving the Fed's interest rates back to a more normal level. She also stressed that she'd like to see a few more months of data before gaining confidence that interest rate cuts are needed.