WASHINGTON (Reuters] – The Fed will slow down price rises, but inflation will still be high next year, Loretta Mester from Cleveland Fed said on Sunday.

Mester explained that increasing the cost of home, auto, and other loans will help to reduce excess demand and lower prices, in line with Fed’s 2% inflation target. It will be a long process, I think. It will be above 2% next year, and it will stay there this year. However, the trend will shift downward.”

Fed officials plan to keep increasing interest rates this year. They also expect to reduce its holdings in Treasury bonds and mortgagebacked securities, as another method to raise the cost of credit for businesses and homeowners.

Mester has stated that she prefers an aggressive rate increase than her coworkers and said that she is optimistic the current economic expansion would continue and strong jobs market will continue, despite tighter monetary policy.

Mester claimed that “I think it is possible to reduce excess demand relative supply without pushing economy into recession”. Mester stated, “It’s very important to get inflation under control. It is currently the greatest problem.

The Fed currently rates annual inflation at 6.4%. Mester acknowledged that this was an “extremely painful” level for many families. A 3.6% unemployment rate, which is low in historical terms, has produced large wages gains for many workers, but many prices continue to rise faster.

On Sunday, President Joe Biden took to Twitter (NYSE 🙂 To focus attention on the jobs market, which economists believe is among the strongest markets since World War II.

American workers are returning to work at an unprecedented rate. Over the last four weeks, fewer Americans filed initial claims for unemployment insurance than at any time in our nation’s recorded history,” Biden said.