Federal Reserve Bank of Kansas City President Ester George said on Tuesday that it would be appropriate for the Fed to move earlier on running down its balance sheet when compared to the last tightening cycle, according to Reuters. George continued that her own preference would be to run down the balance sheet sooner rather than later. 

The current very accommodative monetary policy stance of the Fed is "out of sync" with the economic outlook, she added, saying that the strength of economic fundamentals will continue to support solid consumption growth. On the impact of the surge in Omicron infections, George said that the surge is likely to weigh on the labour force participation rate and further delay the rotation in spending from goods to services. However, economic activity, she said, especially when it comes to spending, had become more resilient to spikes in Covid-19 infection rates and that the labour market looks tight.