"If inflation expectations become unanchored, monetary policy would have to act more forcefully to return inflation to goal," Cleveland Federal Reserve President Loretta Mester said while speaking at the European Central Bank's annual forum on Wednesday.

Additional takeaways

"More costly error is assuming inflation expectations are anchored when they are not."

"There is some risk in the US that longer-term inflation expectations of businesses and households will continue to rise."

"Policymakers cannot be complacent about a rise in longer-term inflation expectations."

"Central banks need to be resolute, intentional in acting to bring inflation down."

"Current situation calls into question the wisdom that monetary policy should look through supply shocks."

"Current inflation situation is a very challenging one."

"In some cases, such shocks threaten the stability of inflation expectations, require policy action."

"Price changes in gasoline and food can have an outsized effect on households' inflation expectation."

"Our policy communications are important for keeping inflation well anchored."

Market reaction

The US Dollar Index showed no immediate reaction to these comments and was last seen posting small daily gains at 104.53.

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