Loretta Mester is President of the Cleveland Fed, and a voting member of the Federal Open Market Committee this year
She has previously said she expects 4 (or more!) Federal Reserve rate hikes this year
(She said 4 or more were 'likely appropriate', back on January 3)
Its OK, I understand she may have been expressing a degree of hawkish irrational exuberance. January 3, just back from holidays, feeling good, and also before the global markets ate something that didn't agree with them (I don't how else to explain the diarrhea, hot and cold flushes, fever, headache, nausea & vomiting we've seen these past 5 weeks ... and that's just me, eh?).
But ... today she dug in her heels, reiterating the "4" call.
OK then ...
There are many, many reasons why that call is so wrong. But, let me touch on just two, 'cause they are super-easy to monitor and we'll have the precise second (out of the 31.6 million odd this year) when that call comes plunging down to earth in flames.
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First, the Federal Reserve has told us hikes will be 'gradual' - which has been taken to mean the fastest we can get them is every second meeting. (Sure, that's a market assumption, but its what I am going on for now)
Second, another market assumption is that we will only get hikes at meetings accompanied by a press conference from Yellen after. (Again, that's a market assumption ... and its not one I subscribe to ... but again I am going to go with it for now)
Righto, then ... what does the FOMC calendar for 2016 look like?
You'll notice I have (very helpfully) highlighted the meetings followed by a Janet Yellen press conference with red arrows.
So, based on my assumptions we will know for sure that Mester's projection is wrong after the March meeting. TBH, why bother waiting? the "4" call is wrong right now.
BUT ... if you want to disregard my assumptions, at this stage we'll be waiting until the July announcement. After that its a definite.
Unless there is an emergency rate hike! (apologies if you've fallen off the chair laughing).
You want how many hikes this year????
