Cleveland Fed President Loretta Mester told Bloomberg TV on Friday the Fed has basically met the criteria for tapering asset purchases. However, she further noted that the only real risk is if the Delta variant causes a bigger pullback in demand than expected, per Reuters. 

Additional takeaways

“Fed should use the September meeting to layout thinking about the pace and timing of tapering.”

“Looking to end the tapering by the middle of next year.”

“Whether we start to taper in November or December is not going to make a material difference for the economy.”

“Economy has basically improved enough that fed doesn’t need to have those asset purchases in place.”

“Changes to interest rates are longer down the road.”

“Businesses she talks to are concerned about the delta variant but it really hasn’t tempered demand so far.”

“Fed needs to keep watching for effects of the delta variant.”

“Even if there is some pullback she thinks the economy will remain strong.”

“US economy still hasn’t reached maximum employment.”

“Fed needs to let the economy continue to move forward and then assess if rates need to be adjusted.”

Market reaction

The US Dollar Index remains on the back foot and was last seen losing 0.4% on the day at 92.67.