WASHINGTON, (Reuters) – Inflation must fall for several months before Federal Reserve officials can conclude that it has reached its peak, Loretta Mester, Cleveland Fed president, said Friday. She also indicated she is open to considering a faster rate hike at the September Fed meeting if data don’t show any improvement.

In the face of continuing conflict in Ukraine, and the risk that China’s zero COVID policy will cause further disruption to supply chains, the risks to inflation still remain strong. Mester spoke at a monetary forum, saying that I need to witness several months of steady downward readings in the inflation rate before concluding that inflation has peaked.

Mester stated that there was broad support for increasing the Fed’s half-point interest rate at its June and July meeting. This fall, Mester believes it will be an important time to assess whether prices are falling from their 40-year peak. If so, the Fed can adjust the rate of hikes.

Mester explained that “if by September’s Fed meeting, the monthly readings of inflation give compelling evidence that inflation moves down”, then rate rises could slow. But, Mester noted, “if inflation fails to moderate then a quicker pace may be required.”

With some luck supply disruptions will start to diminish and labor market participation continues to increase. This will help to alleviate supply constraints and allow supply and demand to be in better balance.  We cannot depend on luck.