In an interview with the Financial Times, Cleveland Federal Reserve Bank President, Loretta Mester, delivered hawkish comments, suggesting that the Fed must go for a rate hike in June.

Key quotes

“I don’t really see a compelling reason to pause — meaning wait until you get more evidence to decide what to do.”

“I would see more of a compelling case for bringing [rates] up . . . and then holding for a while until you get less uncertain about where the economy is going.”

“The only reason for skipping a rate increase when it is clear more tightening is necessary would be extreme market volatility or some other shock.”

"I just think that we may have to go further.”

“At this point, I don’t really necessarily see a compelling reason that we wouldn’t want to take another small step to counter some of that really embedded, stubborn inflationary pressure.”

“Debt-ceiling deal removes ‘big piece of uncertainty’ over US economy.”

Market reaction

The US Dollar Index is testing intraday highs near 104.40 on Mester’s comments, up 0.18% on the day.