Feb 16 (Reuters) - As the Federal Reserve's higher interest rates slow the economy, a recession may result, Cleveland Fed President Loretta Mester said on Thursday, though it's not part of her baseline forecast and is not what the central bank wants.

"I don't think it's a positive outcome, but it may happen," Mester said. "We may have a mild recession - I can't rule that out. I haven't penciled that in to my own projection, but when you have growth well below trend, it wouldn't take that much of a negative shock -- but again I don't think that's necessarily a positive thing, that's not what we are engineering to do." (Reporting by Ann Saphir; Editing by Sandra Maler)