Bar is higher for Warsh to defend Fed independence, says Fmr. Cleveland Fed President Loretta Mester

Summary

Loretta Mester, former Cleveland Fed President, joins Closing Bell Overtime to discuss Kevin Warsh's nomination as Fed Chair and the challenge of defending Fed independence. She says Warsh is experienced and up to the task but must establish credibility on independent monetary policy. On the economy, she describes the labor market as in an uneasy supply-demand balance and says monetary policy may not be effective if labor weakness stems from supply constraints. She notes inflation has been above target for over five years, complicating any additional Fed action.

• Loretta Mester reacts to Kevin Warsh's nomination as the next Federal Reserve Chair.
• She says Warsh has strong Fed experience and is a good communicator but must prove his commitment to Fed independence.
• She describes the labor market as being in an uneasy balance between supply and demand.
• She argues monetary policy may not fix labor-market softness if supply-side policies are the main cause.
• She notes inflation has been above the Fed's goal for more than five years.
• She expects Warsh to build consensus as chair and allow differing views at the FOMC.
• No explicit actionable trade or security recommendation is made in the interview.