MNI: Fed's Mester: Expects Clarity on Labor Progress In Sept

Further progress is needed in the U.S. labor market recovery before winding down asset purchases, Federal Reserve Bank of Cleveland President Loretta Mester told reporters Tuesday, adding she expects more clarity by September.

"We've made a lot of good progress. I'd like to see some further progress, especially on participation. I think we'll get more clarity in September," when schools reopen, more people get vaccinated and enhanced unemployment benefits expire, she said.

Millions of retirements over the past year may have permanently altered the structure of the labor supply, she said. But prime age labor participation is still less than halfway back to pre-pandemic levels, short of where it should be to meet the Fed's "substantial further progress bar."

"I doubt labor force participation will get back to where it was in February 2020. But I would like to see us get back farther than we've come," she said.

Inflation has met the Fed's bar for tapering, she said, and risks to inflation are tilted to the upside. She is "comfortable" with the recent rise in inflation expectations, but "it's something we're keeping an eye on."