Fed Official Speaks — Loretta Mester — 2026 Voting Member 2026 voting member and Cleveland Fed President Loretta Mester stated that the current 3.75% to 4% interest rate is not high enough, and she believes further rate hikes are necessary. She prefers smaller, more frequent adjustments, as large moves make it harder for businesses to plan ahead. From her tone, it seems she leans toward observing the situation in October before making a move. After visiting Cleveland-based manufacturer Jergens, Mester noted that customers are now more concerned about how quickly they can get parts, with price taking a backseat to quality and delivery speed. Some are even willing to pay extra for faster delivery. She sees this pricing power as a signal that demand remains strong while supply struggles to keep up. Buyers in AI data centers, in particular, are especially insensitive to price. Rate hikes may not significantly curb demand in this sector, but they could prompt buyers in industries like aviation, energy, or transportation to reconsider expansions and purchases, potentially cooling demand at the margins. Mester also dismissed the notion that "the rise in long-term Treasury yields can substitute for Fed tightening," arguing that bond market tightening can complement policy but cannot replace rate hikes. Inflation has been above 2% for over five years, and most Fed officials expect it won’t return to target until 2029. Mester thinks this timeline is too long, noting that some low-income families have shifted from buying cheaper goods to deciding which bills to skip paying. She believes the economy and corporate investment remain strong, and policy needs to be more restrictive. However, the specifics of each meeting and the size of each hike have not been pre-determined. Overall, the U.S. economy is doing well, allowing for continued rate hikes, but there’s no need for large increases every time. A @Gate — trade more markets.