Philadelphia Fed President Patrick Harker suggested a pause on rate changes in the coming months, emphasizing the importance of allowing current monetary policy measures to take effect.

He said today, “Absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work.”

He also cautioned against expecting immediate rate reductions, noting, “The pandemic taught us to never say never, but I do not foresee any likely circumstance for an immediate easing of the policy rate.”

Harker indicated that there might be a slight rise in the unemployment rate, which was most recently recorded at 3.5% in July, along with a deceleration in the GDP’s growth rate.

Nonetheless, he remains optimistic, stating, “In sum, I expect only a modest slowdown in economic activity to go along with a slow but sure disinflation.”

“I do see us on the flight path to the soft landing we all hope for and that has proved quite elusive in the past, he added.

In a candid interview with the New York Times, New York Fed President John Williams deemed the present monetary policy as being “in a good place”. It’s an “open question” on whether Fed needs additional rate hikes.

He emphasized the need to “watch the data”. “Are we seeing the supply-demand imbalances continue to shrink, move in the right direction? Are we seeing the inflation data move in the right direction?”

He anticipates that the need for a restrictive monetary stance will persist for a while. He contemplates, “I think we’re pretty close to what a peak rate would be, and the question will really be — once we have a good understanding of that, how long will we need to keep policy in a restrictive stance, and what does that mean.”

Also, highlighting his approach towards monetary policy, Williams thought of monetary policy primarily in terms of “real interest rates”, rather than “nominal rates” set by Fed. He stressed the potential consequences if inflation rates declined as projected by numerous forecasts: “if we don’t cut interest rates at some point next year then real interest rates will go up, and up, and up. And that won’t be consistent with our goals.” Hence, “to keep maintaining a restrictive stance may very well involved cutting the federal funds rate next year, or year after”.

Fed Governor Michelle Bowman projected the necessity of further rate hikes during a weekend speech, asserting they are likely needed to push inflation back down to the Fed’s 2% target.

Bowman expressed her support for Fed’s rate hike in July and stated, “I also expect that additional rate increases will likely be needed to get inflation on a path down to the FOMC’s 2 percent target.”

However, Bowman was careful to emphasize that Fed policy is “not on a preset course”. Further decisions will be based on “incoming data and its implications for the economic outlook,” she stated.

She said, “We should remain willing to raise the federal funds rate at a future meeting if the incoming data indicate that progress on inflation has stalled.”

While recent lower inflation reading was seen as positive, Bowman asserted the necessity of consistent evidence of inflation moving meaningfully toward the 2% goal when contemplating additional rate hikes and the duration of restrictive federal funds rates.

Full remarks of Fed Bowman here.