Boston Fed President Susan Collins described current monetary policy as “well positioned” to adapt based on new economic data and the evolving economic outlook. She is “optimistic” that Fed can achieve 2% inflation target in a “reasonable amount of time” while maintaining a robust labor market. However, she now anticipates that reaching this goal will “take more time than previously thought.”

Collins highlighted “recent upward surprises to activity and inflation”. This has led her to suggest that maintaining the current policy level might be necessary for a longer period than initially expected. She emphasized the importance of ensuring that inflation moves “sustainably toward 2%” before considering any policy adjustments.

Minneapolis Fed President Neel Kashkari highlighted at a conference overnight that the current interest rates are likely to be maintained “for an extended period of time” to ensure that inflation steadily returns to the target level.

Kashkari elaborated on circumstances that might prompt a shift in this policy. If inflation metrics “start to tick back down” or if there is a “marked weakening in the labor market,” Fed might consider lowering interest rates. Conversely, he warned that if inflation seems “embedded or entrenched now at 3%,” an increase in rates could be necessary to control inflationary pressures.

Further exploring the complexities of current economic conditions, Kashkari, in an essay, suggested that misjudgments regarding the tightness of existing policies might explain the “constellation of data we are observing.” He questioned whether the disinflationary trend is just slower than expected or if inflation is settling around 3%, indicating that “more work” might be required to meet Fed’s dual mandate objectives.

Richmond Fed President Thomas Barkin’s said overnight that the pace of disinflation has possibly stalled. “We’re going to need a little more edge off of demand to get all the way” back to target, he added. Despite these challenges, he expressed optimism regarding the current level of the benchmark policy rate, indicating confidence that it will effectively address inflation.

“I still have the weight going toward inflation,” Barkin said. “It’s a stubborn road back…It doesn’t mean you won’t get it back. It just means it takes a while…to corral price setters into believing they don’t really have a chance” for aggressive increases.

Separately, New York Fed President John Williams affirmed that “eventually we’ll have rate cuts”. But for now, monetary policy is in a “very good place.” He refrained from providing a specific timetable for rate adjustments but noted that the economy is gradually returning to better balance amid a shift to a slower rate of growth. He anticipates GDP growth in the range of 2-2.5% for the year.