San Francisco Fed President Mary Daly acknowledged that while inflation appears to be slowing, it remains far too elevated. In an interview held at the Brookings Institution in Washington, D.C., Daly indicated the need for further measures to counteract inflationary pressures.

She affirmed, “I think it’s a very reasonable projection to say a couple of more rate hikes will be necessary.”

Daly reflected on the resilience of the U.S. economy, which has shown surprising strength despite ongoing economic challenges. The robust data, according to Daly, signal a clear need for intervention: “We need to raise rates to bridle that economy more.”

“With labor market still strong, inflation high, risks of doing too little are outweighing risks of doing too much,” she added.

Nevertheless, “It’s appropriate to slow the pace of rate hikes.”

In a speech delivered today, Cleveland Fed President Loretta Mester expressed surprise at the resilience shown by the economy which, in her words, “has shown more underlying strength than anticipated earlier this year.” However, Mester also raised concerns regarding the stubbornly high inflation rates, noting that “progress on core inflation [has been] stalling.”

“In order to ensure that inflation is on a sustainable and timely path back to 2%,” she said, “my view is that the funds rate will need to move up somewhat further from its current level and then hold there for a while as we accumulate more information on how the economy is evolving.”

Mester also touched on labor market’s imbalance during reopening, where she noted that “labor demand well outpaced labor supply, putting upward pressure on wages and price inflation.” Although she sees progress in achieving a more balanced situation, she cautioned that “it is slow progress and demand is still outpacing supply.”

Despite these challenges, Mester revealed a streak of optimism in the business community. She said that most business leaders “think there won’t be a recession this year, and many think that, even if demand slows down some more, a recession will be avoided or will be very mild.”

Dallas President Fed Lorie Logan has voiced concerns about inflation and suggested that a more restrictive monetary policy may be necessary. She indicated that, based on the recent economic data and the Fed’s dual-mandate goals, it would have been fitting to raise the federal funds target range FOMC June meeting.

However, Logan pointed out the “challenging and uncertain environment,” arguing that “it can make sense to skip a meeting and move more gradually.”

Logan expressed deep concerns about whether inflation will return to target levels in a timely and sustainable manner. She further noted, “the continuing outlook for above-target inflation and a stronger-than-expected labor market calls for more-restrictive monetary policy.”

On the notion of a delayed impact from past policy actions, Logan expressed skepticism, saying, “I’m skeptical about the potential for large additional effects from this channel.” This stance challenges the widely held view that policy measures often take time to influence the economy, suggesting the need for swift action in addressing the current economic issues.