Fed Chair Jerome Powell repeated his upbeat comments today. He said the US is experiencing “a remarkably positive set of economic circumstances, and we’re working hard to try to sustain the expansion and keep unemployment low and keep inflation right on target”. And, “there’s really no reason to think that this cycle can’t continue for quite some time.” On interest rates, he said they are “still accommodative” and “we’re gradually moving to a place where they’ll be neutral.” He added that “we may go past neutral. But we’re a long way from neutral at this point, probably.”

Other comments from Fed officials were generally hawkish. Chicago Fed President Charles Evans said “getting policy up to a slightly restrictive setting — 3, 3.25 percent — would be consistent with the strong economy and good inflation that we are looking at.”

Philadelphia Fed President Patrick Harker said he preferred Fed’s rate hike schedule to avoid inverting the yield curve and “it’s just a question of timing”. He added there is no need to “rush the normalization process”. For now his forecasts are “”three this year, two next year, two year after.”

Cleveland Fed President Loretta Mester said she supported a gradual pace of hiking. But she also noted that “if we end up having inflation move high up” or if it goes too much above target, “then we need to move policy faster.”

Richmond Fed President Tom Barkin said “growth is solid, unemployment is low, and inflation is at target”. He didn’t touch directly on monetary policy but struck a tone of caution on flattening yield curve which “could suggest markets are losing confidence in the outlook.”

Fed Governor Christopher Waller advocated for Fed to “wait a little longer,” suggesting that “at least another couple more months” of economic data would be crucial before commencing any policy easing.

In a speech overnight, Waller expressed concerns regarding the recent high CPI inflation reading, describing it as potentially “a bump in the road” or a more serious indication that the significant progress made in controlling inflation over the past year could be “stalling.”

This uncertainty solidifies his viewpoint that a patient approach to policy adjustments is warranted, allowing more time to assess whether January data represents “a speed bump or a pothole”.

While Waller anticipates that it may become appropriate to begin easing monetary policy sometime within the year, he clarified that the timing and extent of policy adjustments would heavily rely on incoming economic data.

Full speech of Fed’s Waller here.

Richmond Fed President Thomas Barkin also said the economy would face a “rough several months”. The “recent escalation in cases” of coronavirus infections “makes me believe we still have a long way to go”.

He a knowledged that the progress on vaccines are promising. However, “as best I can tell, a broad enough rollout to make us comfortable fully interacting in personal commerce again looks like sometime this summer at best”.

“That means a rough several months still but daylight on the horizon.”