NEW YORK—Both supply-side and demand-side factors are contributing to U.S. inflation right now, but most of the current price changes may be driven by pandemic-related shifts that could subside over time, Cleveland Federal Reserve Bank President Loretta Mester said on Thursday. Policymakers need to distinguish short-term inflationary pressures from inflation that could be longer lasting when determining how to respond, Mester said during a panel organized by the European Central Bank “How much of that increase is driven by supply shocks and how much of it is driven by demand that would respond to monetary policy?” Mester said. An increase in medium- and long-term inflation expectations, paired with a continued rise in inflation, could be a sign that the price changes are being driven more by higher demand than policymakers anticipate, said Mester. However, the Fed official, who will have a vote next year on the Fed’s policy-setting committee, said …