Fed’s Mester: Omicron threatens to stoke US inflation

In an interview with the Financial Times (FT), Cleveland Fed President Loretta Mester made some hawkish comments on speeding up taper and likely rates in the next year.

Key quotes

Omicron threatens to stoke US inflation.

Variant could exacerbate supply chain crunch and worker shortages.

The fear of the virus is still one of the factors holding people back from re-entering the labor force.

Have to entertain the risk that those persistently high numbers of inflation could become more embedded.

The economy is better at dealing with these variants.

The demand side effects have been lessened, but we’ve seen these supply-side effects, which are related to the virus.

Would support at least one rate increase next year, and that two might be “appropriate”.