In an event overnight, New York Fed President John Williams provided said the economy remains robust, with expectations for continued positive growth and a gradual decrease in inflation. His asserted that three rate cuts within the year could serve as a “reasonable starting point”.

Williams highlighted the significant decline in inflation over the past year and a half, emphasizing the “broad-based” reductions across various components of inflation measurements. Despite the positive trend, Williams candidly acknowledged “we still have a ways to go on the journey to sustained 2% inflation.”

Boston Fed President Susan Collins suggested that it may become “appropriate to begin easing policy later this year,” highlighting the importance of a “methodical, forward-looking approach” to gradually reduce rates.

Collins anticipated further inflation deceleration would might necessitate further slowdown in economic activity. However, she noted the “considerable uncertainty” surrounding the magnitude and timing of this slowdown. The path ahead, as Collins notes, is expected to be “bumpy,” as suggested by hotter-than-expected employment and price increase readings.

In this context, it will be important to focus on seeking “sustained, broadening signs” of progress towards its dual mandate goals, acknowledging that such progress may unfold unevenly. Collins cautions against setting overly stringent expectations for the data, indicating that “expecting all data to speak uniformly is too high a bar.”

Fed Governor Michelle Bowman articulated that Fed is “not at that point” to initiate rate cuts. Additionally, she expressed readiness to increase rates further if progress on inflation “has stalled or reversed”.

“Should the incoming data continue to indicate that inflation is moving sustainably toward our 2% goal, it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive,” Bowman said in a speech overnight.

However, “in my view, we are not yet at that point,” she emphasized. “Reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent in the longer run.”

“While the current stance of monetary policy appears to be at a restrictive level that will bring inflation down to 2 percent over time, I remain willing to raise the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed,” Bowman added.

Full speech of Fed’s Bowman here.