Atlanta Fed President Raphael Bostic emphasized a patient approach in his remarks today, “I am not in a hurry to raise, I am not in a hurry to reduce either.” His comments suggest a desire for stability and observation, even in the face of an economy that’s showing signs of slowing down.

Delving deeper into the potential implications of the present policy rate, Bostic commented, “The current policy rate is starting to slow the economy down. How fast is it going to slow?”

Bostic’s perspective revolves around a measured response, allowing economic forces to play out without rapid interventions. He emphasized, “Slowing is happening. Let’s let it happen. Let’s let the world move and let’s be patient.”

Cleveland Fed President Loretta Mester acknowledged in a speech yesterday the robust state of the economy with a cautious stance on inflation and interest rates. She signaled the possibility of another rate hike this year.

“I suspect we may well need to raise the fed funds rate once more this year and then hold it there for some time,” she said.

However, Mester also underscored the contingent nature of future monetary policy decisions, stating, “whether the fed funds rate needs to go higher than its current level and for how long policy needs to remain restrictive will depend on how the economy evolves relative to the outlook.”

Inflation, according to Mester, continues to pose a significant challenge. She plainly remarked that inflation remains “too high”. Though she expects some easing of price pressures, she cautioned that “the risks to the inflation forecast remain tilted to the upside.”

On a positive note, Mester expressed optimism about the broader economic picture. “The economy is on a good path,” she observed. Delving into labor market dynamics, she pointed out that while conditions remain robust, the disparity between labor demand and supply is shrinking, indicating that “firms are finding it easier to find the workers they need.”

Fed Vice Chair Michael Barr advocated for a cautious approach to monetary policy adjustments during his speech yesterday. While discussions surrounding interest rate hikes are paramount, Barr’s concern is primarily anchored on the duration for which these elevated rates should be maintained.

Speaking on the current tightening cycle, Barr highlighted the progress made and expressed that it’s a juncture where meticulous decision-making is essential. He stated, “Given how far we have come, we are now at a point where we can proceed carefully as we determine the extent of monetary policy restriction that is needed.”

Perhaps most notably, he reframed the ongoing debate on rate adjustments by remarking, “The most important question at this point is not whether an additional rate increase is needed this year or not, but rather how long we will need to hold rates at a sufficiently restrictive level.” This perspective places a clear emphasis on policy duration, suggesting a prolonged period of elevated rates may be more impactful than further substantial hikes in the near term.

On the economy, Barr’s baseline is for real GDP growth to “moderate to somewhat below its potential rate over the next year” as restrictive monetary policy and tighter financial conditions restrain economic activity.” He anticipates this deceleration in growth to be concomitant with “some further softening in the labor market”.

Full speech of Fed Barr here.

Fed Michelle Bowman has made her hawkish stance clear on the pressing issue of inflation that continues to grip the US economy. In a speech today, Bowman emphasized the persistence of inflationary pressures, signaling the need for a more restrictive monetary policy to anchor inflation back to the Fed’s 2% target.

“Inflation continues to be too high, and I expect it will likely be appropriate for the Committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2 percent goal in a timely way,” Bowman stated.

Bowman pointed to the latest inflation reading based on the PCE index, noting a rise in overall inflation driven, in part, by escalating oil prices. “I see a continued risk that high energy prices could reverse some of the progress we have seen on inflation in recent months,” she warned.

Also, Bowman cited the Summary of Economic Projections released during the September FOMC meeting, where “the median participant expects inflation to stay above 2 percent at least until the end of 2025.” This expectation of prolonged inflationary pressures aligns with Bowman’s perspective that “further policy tightening” will be instrumental in steering inflation back towards target.

Full speech of Fed Bowman here.