Fed Chair Jerome Powell said yesterday that “we will reach the time at which we will taper asset purchases when we have made substantial further progress towards our goals”. He added that tapering would, “in all likelihood be before, well before,” Fed considers rate hikes and “that is the sense of the guidance”.

Separately, Vice Chair Richard Clarida said that if inflatoin expectations “drift up persistently”, policy would need to be adjusted. For example, if wages start to grow consistently faster than productivity, that would set the stage for a “sustained increase in inflation”. He added, “we are going to be very attentive to what we are seeing in the nexus between wages, productivity, prices and markups.

New York Fed President John Williams said, “the economy is coming back pretty strong right now.” “There’s a lot of things that are uncertain,” he added. “But I think the economy will be able to get back to full strength.” But he also acknowledged, “we’re a little bit in a race between the vaccinations and the new variants of the coronavirus.”

San Francisco Fed President Mary Daly said, “if we didn’t have higher inflation readings, you might let the economy go a little bit more to see if we can get through COVID and have those individuals come back.”

However, “right now, we’re dealing with inflation that’s above our target and inconsistent in its current readings with our longer run views on price stability,” she added. “We have to deal with that.”

Fed might need to start dialing down some of the extra policy accommodation and “start crafting a plan to, at least, you know, think about raising the interest rate,” she said.