Former Cleveland Fed Pres. Mester: High gas prices are salient for people's inflation perceptions

• February CPI numbers were largely in line with expectations, with core services (ex-housing) showing improvement.
• The primary concern for the Fed going forward is the impact of the war on inflation and the real economy, especially how long energy prices will remain elevated.
• Mester advises the Fed to be careful not to view oil price shocks as 'one-off' events, as high gasoline prices significantly influence public inflation perceptions and could lead to more lasting inflation.
• While the growth impact of oil price shocks might be less than in the past (due to the US being an energy exporter and more efficient), the inflation side requires careful monitoring.
• The Fed is currently in a 'pretty good place' with its fed funds rate to be able to wait and assess the situation, but maintaining stable inflation expectations is crucial.

Former Cleveland Fed President Loretta Mester discusses the February CPI numbers, noting they were in line with expectations. She emphasizes that the focus for the Fed now shifts to the economic impact of the ongoing war, particularly on inflation and the real economy, urging caution against dismissing energy price shocks as transitory.