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A top official at the central bank said on Thursday that the Federal Reserve needs to change its forward guidance on interest rates, in order to better reflect the speed of the Fed’s progress toward its economic goals. In her first speech since taking the helm at the Cleveland Fed in June, President Loretta Mester said inflation signs are encouraging, and that the Fed should expect wages to rise with prices, rather than lead price gains. Mester, a voting member of the Fed’s policy-setting committee this year, said the Fed needs to navigate back to more normal seas, though she added that the Fed’s large balance sheet will complicate normalization.

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