Fed's Mester raises GDP outlook, still thinks gradual rate increase path appropriate

Cleveland Federal Reserve President Loretta Mester raised her outlook for the economy and gross domestic product for 2018, adding that the central bank's plan for gradual interest rate increases is appropriate.

"I've been upping my forecast. I'm now at 2.75 percent to 3 percent for the year, probably closer to 3 percent," Mester said. "I think that the fiscal policy – the stimulus and the tax cuts – has been a positive for the economy in terms of demand growth and so that's one of the factors."

"But also there's been more momentum in the economy than I might have anticipated," she added.

Mester spoke from the Fed's annual retreat in Jackson Hole, Wyoming. She is a current voting member of the Federal Open Market Committee, the Fed's policymaking arm.

Fed Chair Jerome Powell is due to deliver a speech later in the day Friday discussing the summit's theme of changing market structures and the implications for monetary policy going forward.

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