Nov 5 (Reuters) - With strong demand and short supplies driving inflation more broadly through the economy, the clock may be ticking on how long the Federal Reserve can wait before raising interest rates in response, a U.S. central banker suggested on Friday.
"As supply chains heal and demand eases, there is reason to expect inflation will eventually moderate, but it is also clear that the risk of a prolonged period of elevated inflation has increased," Kansas City Fed President Esther George said in remarks prepared for delivery to an energy conference. "The argument for patience in the face of these inflation pressures has diminished."
The Fed this week took a first step back toward more normal monetary policy, reducing its monthly purchases of assets at a pace that should phase them out completely by mid-2022. Fed Chair Jerome Powell said the start of the bond-buying taper should not be taken as a direct signal for how soon the Fed will raise rates.
George, whose policy leanings are typically hawkish, did not directly say when she favors a rate hike, but her remarks suggest she is inclined not to wait too long and risk inflation getting out of control.
Most of the time Fed policymakers don't need to choose between achieving their price stability and employment goals, she noted.
"There are however times when the objectives can appear to be in conflict," George said. "And now might be one of those times with inflation running well ahead of its longer-run average and labor markets appearing to have further room to recover." (Reporting by Ann Saphir Editing by Chizu Nomiyama)