Atlanta Fed President Raphael Bostic signaled uncertainty over the timing of rate cuts, citing ongoing concerns about inflation and policy shifts under the Trump administration. Speaking at an event overnight, Bostic emphasized the need for “more clarity” before making any definitive moves on monetary policy.

He acknowledged the difficulty in assessing the current economic conditions, stating, “My view is until we have more clarity, it’s going to be impossible to make a judgment about where our policy should go and how fast and at what pace, and so we’re just going to have to get more information before we’re going to be able to move.”

He also provided his estimate for the neutral rate, which he sees in a range of 3%-3.5%. Currently, Fed’s target range stands significantly higher at 4.25%-4.5%. Bostic’s initial projection was to see rates move about halfway to neutral by year-end. but the timeline remains highly contingent on economic developments and inflation trends.

Fed Chair Jerome Powell acknowledged that the latest inflation data released yesterday confirms the US is making progress but is still “not there on inflation.”

Following January’s stronger-than-expected CPI report, Powell said in the Congressional testimony that Fed will “keep policy restrictive for now” to bring price pressures down.

Powell also underlined that the “economy is strong, the labor market is solid” allowing the Fed to keep a tight policy stance and wait for inflation to ease further.

He also emphasized that one month of higher readings should not be interpreted as a complete reversal of the disinflation trend, especially given that Fed’s preferred inflation measure, the Personal Consumption Expenditures index, typically runs below CPI.

New York Fed President John Williams stated in a speech overnight that policy remains “well positioned” to balance the dual mandate. He added that the current “modestly restrictive” policy is expected to support a gradual return to 2% inflation while maintaining economic growth and labor market resilience.

Nevertheless, Williams also acknowledged the high degree of uncertainty surrounding the economic outlook, particularly concerning fiscal, trade, immigration, and regulatory policies.

On the labor market, Williams noted that it has reached a “good balance” after a period of “unsustainably tight conditions” in prior years. He highlighted that wage growth has now aligned with productivity gains, which should keep inflationary pressures contained. He projected inflation at around 2.5% this year and expects it to reach the Fed’s 2% target “in coming years.”

Williams also forecasted that the unemployment rate would remain stable between 4% and 4.25% throughout the year, with GDP growth expected to hold around 2% both in 2025 and 2026.

Fed Chair Jerome Powell reiterated in the Semiannual Monetary Policy Report to Congress that Fed is not in a hurry to cut interest rates.

A prolonged policy hold remains on the table if inflation does not continue its downward trend. However, he also acknowledged that if the labor market weakens or disinflation accelerates, Fed could respond with further easing.

Powell noted that if inflation fails to make sustained progress toward the 2% target, Fed can “maintain policy restraint for longer.” On the flip side, if the labor market weakens unexpectedly or inflation declines more rapidly than forecast, Fed “can ease policy accordingly.”

Full opening remarks of Fed Powell here.

Cleveland Fed President Beth Hammack reinforced the case for a prolonged pause in rate cuts, emphasizing that it will likely be “appropriate to hold the funds rate steady for some time.”

She highlighted the need for a patient approach, allowing Fed to assess the labor market, inflation trends, and overall economic performance under the current policy stance.

Hammack noted that inflation risks remain “skewed to the upside,” with possibility of delaying the return to 2% target. The “recent history” of elevated inflation adds complexity to the outlook, raising concerns about entrenched pricing pressures.

She also pointed to “considerable uncertainty” surrounding government policies, particularly with regard to the “ultimate effects” of recent tariff measures.