Fed’s Mester says more fiscal, not monetary support, is needed

Federal Reserve Bank of Cleveland President Loretta Mester said fiscal policy support, not additional monetary-policy action, is what the U.S. needs most as surging Covid-19 infection rates threaten to smother economic activity.

“The virus case increase is very concerning and the fact that we don’t have a fiscal package is very concerning,” Mester said Thursday in an interview with on Bloomberg Television with Michael McKee and Jonathan Ferro.

Mester, a voter this year on the rate-setting Federal Open Market Committee, noted that some sectors of the economy are doing fine while others remain severely damaged.


“With the disparate impact, that’s where fiscal policy plays a role because fiscal policy can be really targeted,” she said, whereas monetary policy is a much more blunt tool for stimulating the economy. “We’re in a good place with our monetary policy because we are very accommodative.”

At its Nov. 4-5 meeting, the FOMC discussed its options for altering large-scale asset purchases as a way to further lower borrowing costs for businesses and households. The Fed is currently buying about $120 billion in Treasuries and mortgage-backed bonds every month, partly aimed at lowering borrowing costs for businesses and households. The Fed’s next meeting is Dec. 15-16.