Comments from Mester
- We've certainly made substantial further progress since December when policy guidance was put in place
- The trick now is communicating policy stance
- I'm comfortable if we begin to talk about a taper in September and start to taper before year end
- There's no rush to taper
- I expect tapering to start some time this year
- Says she's worried about covid-related price increases 'lingering' and moving into inflation expectations
- Businesses are saying they thought supply issues would be resolved by now
- Higher prices staying longer could feed into inflation expectations, that's where we'll have to take a hard look
- My baseline outlook is still that prices will fall back down but I think it's 'up in the air' now about when that will be
- Says that 'if we complete taper by the middle of next year' they'll have time to assess the potential timing of a hike
- Companies are still seeing strong demand despite delta
The US dollar rose on her comments. The market largely brushed off comments from hawks earlier but Mester is closer to the core of the Fed and she's outlining a plan that's a taper starting in Nov/Dec and wrapping up in mid-2022. That's faster than anticipated and it's lifting the dollar.