In a speech, Fed Governor Christopher Waller expressed concern over the persistently high inflation rates and emphasized the need for the continuation of tighter monetary policies.

Waller stated, “Whether you measure inflation using the CPI or the Fed’s preferred measure of personal consumption expenditures, it is still much too high and so my job is not done.”

“I interpret these data as indicating that we haven’t made much progress on our inflation goal, which leaves me at about the same place on the economic outlook that I was at the last FOMC meeting, and on the same path for monetary policy,” he added.

His outlook remains consistent with the stance from the last FOMC meeting, indicating a steadfast commitment to tightening monetary policy. He emphasized that “the labor market continues to be strong and quite tight, and inflation is far above target, so monetary policy needs to be tightened further.”

The Fed Governor also emphasized that, given the current circumstances, “monetary policy will need to remain tight for a substantial period of time, and longer than markets anticipate.”

Full speech of Fed Waller here.

In a recent interview with Reuters, Atlanta Fed President Raphael Bostic discussed the implications of this week’s slowing consumer price increases and falling producer price inflation. According to Bostic, these developments are in line with the possibility of one more rate hike, as momentum suggests a trajectory towards 2% inflation.

Bostic expressed that the aggressive rate increases over the past year are just beginning to “bite” the economy, justifying a pause after one more rate increase. This pause would allow for an assessment of the economy and inflation’s progression while aiming to minimize the impact on growth and employment.

Despite the current economic landscape, Bostic remains optimistic, believing that unemployment won’t need to surpass 4% and that the economy can continue to grow, albeit at a slower pace. He attributes the persistent consumer demand and robust hiring to the economic distortions caused by the trillions of dollars in government support provided during the COVID-19 pandemic.

FOMC minutes from the March 21-22 meeting revealed that committee members acknowledged inflation remaining significantly above the 2% target and a tight labor market, suggesting that “additional policy firming may be appropriate.” Some participants even considered a 50 basis point increase in the target range, but due to potential banking-sector developments impacting financial conditions and economic activity, they opted for a smaller increment.

The minutes note that several participants contemplated keeping the target range steady to allow more time to assess the economic effects of recent banking-sector developments and the cumulative tightening of monetary policy. However, due to Fed’s actions in coordination with other government agencies, which helped stabilize the banking sector, they deemed a 25 basis point increase appropriate in order to address elevated inflation and stay committed to the 2% longer-run goal.

The Committee agreed to consider recent banking developments in future monetary policy decisions, focusing on how they may affect employment, inflation, and the risks surrounding the outlook.

Full FOMC minutes here.

San Francisco Fed President Mary Daly commented on the CPI report released today, calling it “good news” but also noting that inflation remains elevated. She said, “Headline release showed that it’s going down, it’s going in the right direction, but it’s still elevated. It’s not consistent with price stability.” Daly emphasized her focus on core services, particularly core services minus housing, in assessing inflation trends.

Daly also commented on the labor market, observing signs of cooling but noting that it remains extremely tight, with a gradual return to balance expected. Overall, she stated, “The strength of the economy and the elevated readings on inflation suggest that there is more work to do,” adding that the extent of this work depends on several factors with considerable uncertainty.

In a CNBC interview, Richmond Fed President Thomas Barkin shared his thoughts on inflation, emphasizing the importance of core inflation, which is still running slightly above 5% year over year. He acknowledged recent positive news regarding energy prices but maintained that there is more work to be done to bring core inflation down to desired levels.

Although Barkin did not explicitly state his position on another rate hike at the Fed’s upcoming policy meeting in May, he emphasized the importance of closely monitoring jobs and inflation data, both of which remain relatively robust.

He said, “I’m waiting for inflation to crack … It’s moving in the right direction … but in the absence of a month or two months or three months with inflation at our target, it’s hard to make the case that we’re compellingly headed there.”