Mester: U.S. Will Withstand Soft Patch Overseas

(RTTNews) - The U.S. economy has enough momentum to withstand turmoil overseas and volatile stocks, Cleveland Fed President Loretta Mester said Friday.

"I continue to monitor developments, but until I see further evidence to the contrary, my current expectation is that the U.S. economy will work through this episode of market turbulence and the soft patch of economic data to regain its footing for moderate growth, even as the energy and manufacturing sectors remain challenged," Mester said in Sarasota, Fla.

Mester downplayed recent weakness in the stock market, noting that American consumers are still in the mood to spend.

"Relative strength in the consumer sector shouldn't be too much of a surprise because it is based on sound economic fundamentals," she said.

"Consumer spending has been buoyed by continued improvement in household balance sheets, growth in personal income, which reflects the progress in labor markets, and lower oil prices."

As such, Mester continues to favor gradual rate hikes as the Fed looks to normalize monetary policy.