Stock market drop far from harming U.S. economy: Fed’s Mester

October 25, 2018

NEW YORK (Reuters) – The recent cratering of stock markets is nowhere near severe enough to rattle confidence and significantly hurt U.S. business and consumer spending, a Fed official said on Thursday, in the latest unruffled message from the U.S. central bank.

In a speech, Loretta Mester, president of the Cleveland Fed, reinforced the U.S. central bank'[s steady-as-she-goes expectation to keep gradually raising interest rates in the face of a nearly month-long fall in major U.S. equity indexes, which has been driven by worries over the effects of U.S. tariffs and a slowdown in China.

“While a deeper and more persistent drop in equity markets could dash confidence and lead to a significant pullback in risk-taking and spending, we are far from this scenario,” said Mester, who leans somewhat hawkish.

“Similar to the swings in the market we saw earlier this year, the movements of late do not seem to be signaling that investors are becoming overly pessimistic,” she added.

(Reporting by Jonathan Spicer; Editing by Leslie Adler)

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