(Reuters) – The U.S. Federal Reserve needs to begin reducing its U.S. Treasury bonds, mortgage-backed securities, and other holdings accumulated in the aftermath of the pandemic, Kansas City Fed President Esther George stated on Tuesday. She is the latest policymaker who has called for a faster runoff of the Federal Reserve’s balance sheet than it did during its last tightening cycle.

George made prepared remarks at the virtual Central Exchange event, which was hosted by a women’s organization.

The Fed’s current “very accommodating” policy of monetary policies was incompatible with the economic outlook, she stated. Inflation is at an all-time high of 40 years, there are strong demand and evident labor market tightness.

In the last month, the U.S. central banks has quickly changed their course to combat inflation. It now expects an increase in interest rates sooner than expected and it will happen at a faster pace. Current policymakers believe that there will be three increases in interest rates this year. Since March 2020, the benchmark overnight lending rate hovered around zero.

As it eliminates additional stimulus to support the economy during the COVID-19 epidemic, the company is also speeding down its bond-buying program in order to reduce purchases.

Next is how and when to decrease the Fed’s current balance sheet, which has doubled in the last two years from $4.1 trillion up to $8.7 trillion. George stated that raising interest rates but maintaining large reserves could help flatten yield curves and promote greater risk taking in the financial markets.

Earlier on Tuesday, Atlanta Fed President Raphael Bostic said https://www.reuters.com/business/feds-bostic-says-three-hikes-fast-balance-sheet-runoff-needed-inflation-fight-2022-01-11 high inflation and a strong economy warrant a rapid rundown of Fed asset holdings to draw excess cash out of the financial system as he advocated completing the process in a couple of years. The Fed could have to increase interest rates by at least 3 times in 2019, starting as early as March.