When it comes to hawkish talk at the Fed about what may be required to bring high levels of inflation under control, Federal Reserve governors are leading the way.

In recent weeks, two Fed governors have stated that if inflation does not begin to moderate soon, the central bank's timing for raising interest rates may be pushed forward.

Their rate-hiking rhetoric contrasts sharply with that of the majority of other Fed officials. Most officials are unambiguously ready to begin a so-called taper, or winding down, of the Fed's bond-buying stimulus, which is currently running at $120 billion per month, at the Federal Open Market Committee's meeting on November 2-3. Few, however, are willing to discuss raising the central bank's primary tool for influencing the US economy's momentum: the now-near-zero federal-funds rate.

“The next several months are critical for assessing whether the high inflation numbers we have seen are transitory,” Fed governor Christopher Waller said on Oct. 19. “If monthly prints of inflation continue to run high through the remainder of this year, a more aggressive policy response than just tapering may well be warranted in 2022.”

Christopher Waller

Fed Governor Randal Quarles is willing to give inflation a longer leash than Mr. Waller, but he also believes that high inflationary pressures could change the outlook for a rate hike. Mr. Quarles stated last Wednesday that "if we are still seeing 4% inflation or in that range next spring, then I think we might have to reassess the speed with which we would consider raising interest rates."

Their remarks come as the Fed has been collectively advancing the timing of its rate hike forecast. The most recent FOMC meeting, held in mid-September, shifted the provisional timing of a move up from the current target rate of 0% to 0.25% from 2023 to next year. A strong recovery with inflation far exceeding the Fed's 2% target is now expected to last longer than expected, supporting the shift in officials' collective view on interest rate policy.