Mester Affirms Hawkish Credentials

Cleveland Fed President Mester (’22 FOMC voter) has reaffirmed her hawkish credentials in the wake of the recent commentary from Fed Chair Powell, stressing that she is “very open” when it comes to discussing a faster tapering process in a BBG interview. She suggested that a faster tapering process would buy the Fed an option to hike, if such a move was required. Her preference is for the tapering process to wrap up in Q122/early Q222, which should give the central bank room to hike rates twice in ’22, if required.

• She also noted that momentum in the economy is ”clear,” with a high rate of inflation observed. Mester also flagged the need for more data when it comes to the risk of Omicron, while highlighting the idea that the economy has learned to cope with COVID waves.