Mester said declines in energy prices and structural factors weakening price pressures have caused her to revise down her near-term forecast for inflation, but she continued to expect it would return toward 2% “over the next couple of years.”
Based on recent public comments, and assuming no significantly negative data emerges this month, Mester is likely to get support at the July 30-31 meeting from Dallas Fed President Robert Kaplan. He said June 24 he was worried a rate cut “would contribute to a build-up of excesses and imbalances in the economy.”
Richmond Fed chief Thomas Barkin, another potential ally, was non-committal on June 25 when asked about the need for a cut.
Bloomberg News.