Fed's Mester: Both supply-side and demand-side factors are influencing inflation

Cleveland Federal Reserve Bank President Loretta Mester said on Thursday that policymakers need to decipher how much of inflation is driven by supply-side versus demand factors, as reported by Reuters.

Additional takeaways

"Both supply-side and demand-side factors are influencing inflation."

"Much of the inflation seen this year has been driven by components related to the pandemic that may not lead inflation to continue rising."

"If we see inflation and longer-run inflation expectations moving up she would take that as indicative that demand-side factors are playing a bigger role than anticipated."

Market reaction

The US Dollar Index showed no immediate reaction to these remarks and was last seen posting small daily losses at 94.15.