Fed Governor Adriana Kugler expressed growing concern over the recent behavior of inflation. Speaking today, she highlighted that some inflation subcategories “reaccelerated in recent months.” In particular, goods inflation, which had been negative in 2024 but has recently turned positive.

She warned that this shift is “unhelpful” as goods inflation “has often kept a lid on total inflation and also affects inflation expectations”.

Kugler added that surveys are now pointing to rising inflation expectations among consumers too, with much of the uncertainty tied to ongoing trade policy developments.

Despite these concerns, Kugler reaffirmed confidence in the current policy stance, describing it as restrictive while Fed is “well positioned.

Full speech of Fed’s Kugler here.

Atlanta Fed President Raphael Bostic said in a Bloomberg interview that he’s now projecting just one cut by year-end, down from his earlier expectation of two.

Bostic explained the shift was due to his view that inflation will be “very bumpy and not move dramatically and in a clear way to the 2% target”. With inflation unlikely to return to target until 2027, he believes the path to neutral must also be delayed.

Bostic also expressed concern about the inflationary impact of rising tariffs. While such measures are often assumed to cause a one-off increase in prices, Bostic suggested the current environment could be different.

In his view, businesses and consumers may have grown more tolerant of elevated inflation following the pandemic, making price hikes more likely to stick. He noted that many business leaders now feel confident about “a complete pass-through” of higher costs on to customers without fear of losing market share.

New York Fed President John Williams highlighted the elevated level of uncertainty facing the US economy. Speaking at a public event, Williams acknowledged that “it’s hard to know with any precision how the economy will evolve,” pointing to a wide range of potential scenarios shaped by fiscal and trade policy shifts, geopolitical risks, and other external developments.

Williams noted that both hard economic data and forward-looking indicators have been giving mixed signals. He added that the recent surge in policy uncertainty measures.

Despite the murky backdrop, he defended Fed’s current stance, describing the 4.25% to 4.5% policy rate range as “modestly restrictive” and “entirely appropriate.” With inflation still running slightly above target and labor markets remaining solid, there appears to be little urgency to shift course in the near term.

Chicago Fed President Austan Goolsbee struck a cautious but balanced tone in his latest remarks, saying Fed should “wait to see some of these things get cleared up” given the high degree of policy uncertainty.

Speaking to CNBC, he noted a shift in tone among business and civic leaders in recent weeks, highlighting growing “anxiety” and delayed capital spending decisions as companies weigh the impact of tariffs and other fiscal policy developments.

Despite the cautious near-term stance, Goolsbee reaffirmed his longer-term view that interest rates are likely to be lower 12 to 18 months from now.

While the Fed may not be in a rush to act immediately, he emphasized the importance of continued progress on inflation as a key condition for future easing.