San Francisco Fed President Mary Daly said in a WSJ interview that she expects interest rate to rise from the current 4.25-4.50% to 5.00-5.25%. But she added that “doing it in more gradual steps does give you the ability to respond to incoming information.”

Daly said the “case can be made for either” a 25bps or 50bps hike in February. But at the same time, “I want to be data dependent, not wall off a 50 basis point increase.”

She expects unemployment to rise from current 3.5% to 4.5-4.6% as tightening continues. Inflation, now running at 5.5%, will fall to low 3% range by the end of 2023, and closer to 2% in 2024.

St. Louis Fed President James Bullard said yesterday that FOMC aggressive actions in 2022 and planned rate hike in 2023 has “returned inflation expectations to a level consistent with the Fed’s 2% inflation target.”

“During 2023, actual inflation will likely follow inflation expectations to a lower level as the real economy normalizes,” he said.

“The policy rate is not yet in a zone that may be considered sufficiently restrictive, but it is getting closer,” he added.

Regarding the economy, Bullard noted, “The probability of a soft landing has increased compared to where it was in the fall of 2022, where it was looking more questionable… And the reason I think that the prospects for a soft landing have increased is that the labor market has not weakened the way many had predicted” and growth levels rebounded from weakness”.

Atlanta Fed President Raphael Bostic inflation is “way too high” in the US and the FOMC remains “determined to use our policy tools to bring inflation back toward our objective.”

“I appreciate recent reports that include signs of moderating price pressures, but there is still much work to do,” Bostic added. “The most recent report showed the Fed’s preferred measure of inflation running at a 5.5% annual rate.”

Kansas City Fed President Esther George said in a CNBC interview that she has raised her forecast on interest rate to over 5%. Also, “I see staying there for some time, again, until we get the signals that inflation is really convincingly starting to fall back toward our 2% goal”. Interest rate will stay above 5% well into 2024.

“Where we really see the persistence in that inflation seems to be in the non-housing part of the services side of the economy,” George said. “So, I think that’s going to be where I’ll be watching for the real clues to see whether we are getting traction with our policy in that area.”

“I’m not forecasting a recession, but I’m quite realistic that when you see below-trend growth — and the idea that our instrument is going to work on demand, bringing that down — it doesn’t leave a lot of margin there,” George said. “Not my forecast, but I do understand that bringing demand down creates that sort of possibility.”