Fed suggested to adjust rate hikes

WASHINGTON, Dec 6 (Reuters): The Federal Reserve needs to adjust its policy statement to acknowledge clear signs of US economic strength and, in particular, stop telling the world that interest rates won't rise for a long while yet, a top Fed official said on Friday.

Cleveland Fed President Loretta Mester told the news agency in an interview she is more optimistic about the economy than most of her colleagues at the US central bank, and would probably be willing to tighten monetary policy sooner. But as the Fed approaches a key policy meeting on December 16-17, she has not decided whether to dissent if the message remains too dovish for her taste.

"I really believe that our communications need to be adjusted based on what we've seen in the economy," said Mester, who joined the Fed's policy-making ranks in June and has so far backed its formal statements, including a reference that rates will likely not rise for a "considerable time."

"I think that is really stale," she said of the reference. "I don't think that it can be in there."

In only six months atop the Cleveland Fed, Mester, 56, has emerged as a leading voice on how to best telegraph policy intentions to the public and financial markets, with Fed Chair Janet Yellen naming her to a subcommittee on communications.