- Loretta Mester, Cleveland Fed President
Activity in the US factories lost steam in December, but manufacturers were optimistic entering 2015, believing that the slowdown in growth would be temporary. The Institute of Supply Management's manufacturing PMI fell to 55.5 in December, down from 58.7 registered in the preceding month, indicating deterioration in activity but continuing to show a strong growth. Economists, however, had expected a 57.4 reading. For the year, the manufacturing PMI averaged 55.8, the best reading since the first full year after the 2007-2009 recession. Furthermore, Markit's manufacturing PMI came in at 53.9, against analysts' expectations for 54.0 and down from November's reading of 54.8.
Meanwhile, Cleveland Federal Reserve President Loretta Mester said the Fed could lift interest rates in the first half of the year, which is earlier than some expect, pointing to the fact the US economy is on a firm footing. She predicted a 3% growth this year, as the economy will continue to recover, receiving some boost from oil prices. Mester added that inflation would gradually move back to the Fed's target, triggering interest rates hike. The Fed's benchmark interest rate has been near zero since December 2008. Markets participants generally expect a rate hike around mid-2015 - with many eyeing policy meetings set for June, July and September.
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