Cleveland Federal Reserve Bank president Loretta Mester noted on Wednesday that the current inflation situation is a very challenging one, and said the central banks need to be resolute in acting to bring inflation down.
She also suggested that the monetary policy would have to act more forcefully if inflation expectations become unanchored. She stressed, however, that a more costly error is assuming inflation expectations are anchored when they are not.
In Mester's opinion, policymakers cannot be complacent about a rise in longer-term inflation expectations.
Also, she noted that central banks' policy communications are important for keeping inflation well anchored.