Speaking at the Center for Financial Stability on Friday, the Fed's Governor Christopher Waller stated that inflation pressures are becoming more widespread and may last longer into 2022 than he thought earlier. He also warned that inflation may complicate the FOMC's management of monetary policy in 2022.
In his opinion, the next few months will be critical in determining how the Fed's tapering process plays out. "If COVID or some other factor substantially slows the recovery, hindering the progress toward maximum employment, the FOMC could slow the taper," Waller suggested. "But if the economy makes quick progress toward maximum employment or inflation data show no signs of retreating from their currently high readings, the Committee may choose to speed up the taper."
The official also acknowledged that the timing of any policy move is a decision for the FOMC, but added that "for my part, the rapid improvement in the labor market and the deteriorating inflation data have pushed me towards favoring a faster pace of tapering and a more rapid removal of accommodation in 2022."