Boston Fed President Susan Collins highlighted yesterday that further rate cuts will “likely be needed” to support the economy. However, she emphasized that Fed’s policy decisions are not on a “pre-set path” and will remain “remain carefully data dependent”.

Collins noted that while core inflation pressures are still elevated, she is gaining confidence that inflation is gradually returning to the 2% target. She also addressed the labor market, noting that the September jobs report, which exceeded expectations, confirms her view that the job market is “in a good place” — neither too hot nor too cold. She stressed that preserving the healthy labor market conditions is crucial and will require economic activity to grow near trend, which remains her baseline outlook for the coming months.

Atlanta Fed President Raphael Bostic reiterated his firm stance on inflation during remarks overnight, emphasizing that inflation remains “too high”. He added, “I want people to understand that I’m still laser-focused on the inflation target.”

Regarding the labor market, Bostic acknowledged that while it has slowed, it is not weak by any means. He said, adding that monthly job creation is still “pretty robust.” He also noted that the current unemployment rate, though slightly higher than recent lows, aligns with pre-pandemic levels of full employment.

In a speech today, Fed Governor Adriana Kugler expressed her support on “shifting attention to the maximum-employment side” of the dual mandate, while maintaining focus on fighting inflation.

While labor market “remains resilient”, Kugler emphasized, the important of “avoiding an undesirable slowdown in employment growth and economic expansion.”

Regarding future rate decisions, Kugler noted that, “If progress on inflation continues as I expect, I will support additional cuts in the federal funds rate to move toward a more neutral policy stance over time.”

However, she remained cautious, suggesting that if downside risks to employment rise, Fed may need to “more quickly” in easing policy to a neutral stance.

Full speech of Fed’s Kugler here.

In an interview with the Financial Times, New York Fed President John Williams described the latest “dot plot” projections, which show expectations for two quarter-point rate cuts at the remaining meetings this year, as a “very good base case.” He emphasized, however, that these cuts would depend on economic data, rather than following a “preset course.”

Williams also noted that the larger half-point rate cut in September was not “the rule of how we act in the future”. Instead, he explained that the focus for policymakers is to eventually move interest rates toward a neutral setting, one that neither stimulates nor restricts demand.

In a speech overnight, St. Louis Fed President Alberto Musalem noted last week’s employment report, despite exceeding expectations, did not prompt him to alter his baseline outlook for the economy. He added that both inflation and the labor market are currently in a “good place,” with risks to the Fed’s dual mandate—price stability and full employment—”roughly balanced.”

Nevertheless, Musalem expressed caution, arguing that the “costs of easing too much too soon” would outweigh the risks of easing too little. He added that should maintain its approach of “gradual reductions” in interest rates over time, highlighting that “patience” has been key to Fed’s progress on inflation. He maintained that this approach “has served the FOMC well” but was careful not to commit to any specifics regarding the size or timing of future rate cuts.

Separately, Minneapolis Fed President Neel Kashkari echoed Musalem’s sentiment regarding the resilience of the labor market, noting, “It looks like it is still a strong labor market.”

Kashkari acknowledged that traditionally, Fed’s aggressive rate hikes would have led to more significant weakness in employment, but so far, that hasn’t materialized. “We have not seen that, so that’s a really good fact that the job market has stayed strong while inflation has come down,” Kashkari said.

However, Kashkari did caution that the balance of risks is now shifting “away from higher inflation towards maybe higher unemployment”