Fed Vice Chair Richard Clarida also reinforced New York Fed President John Williams’ dovish comments. Clarida told Fox Business Network that “you don’t need to wait until things get so bad to have a dramatic series of rate cuts.” And, “you don’t want to wait until data turns decisively if you can afford to.”

Clarida reiterated that the US economy is “in a good place”. But “we’ve had mixed data” and “disinflationary pressures, if anything, are more intense than I thought six weeks ago.” He added, “we need to make a decision based on where we think the economy may be heading and, importantly, where the risks to the economy are lined up.”

New York Fed President John Williams said yesterday in an interview that slowing the pace of rate hikes in December would simply mean “stepping down one step” in the effort to curb inflation.

“I still think we have a ways to go in terms of where the fed funds target is and where we need to get it to next year in order to get the sufficiently restrictive stance,” he said.

“Inflation, first of all, is the number one problem we’re facing in terms of monetary policy. It is far too high,” Williams said. And, bring inflation back to 2% target will “take a good couple of years”.

But he added: “I expect to see a pretty significant decline in inflation next year as supply chain issues improve, as we see the slowing economy, the economy getting into better balance.”

New York Fed President John Williams said that case for rate cut is getting stronger. And, market expectation on Fed’s rate cut are already helping spending.

He said “if anything, relative to earlier in the year, the conditions, the arguments for adding policy accommodation have strengthened over time, and I think that’s the way I continue to view it.” And, “the markets expect cuts so therefore you see lower mortgage rates, you see lower interest rates, and stronger financial conditions broadly, and I think that contributes to more consumer spending and business spending.”

On the economy, he said it’s in a “good place” but appears now to be “growing at a more moderate pace” than last year”. He pointed to the uncertainties, “especially related to trade and global growth”. And, “we have issues around inflation expectations being soft, obviously inflation continuing to run below 2%.”

Richmond Fed President Tom Barkin said in a speech, while inflation has run below the 2% target it is “not that far-off target”. “With rounding, you could even call it on target.” The new framework allows “only a moderate” overshoot in inflation. “That moderation limits the risk of de-anchoring while sending a positive signal on inflation.”

He added that recent pick up in inflation is “just a natural rebound from a deflationary second quarter.”. While it’s possible that inflation could escalate in the near future, “I have to say I’m less worried about that possibility.” And, should inflation emerge, the Fed has the tools and the will to address it.”

Barkin’s full speech here.

Kansas City Fed President Esther George said yesterday that “the case for continuing to raise rates remains strong” and “the direction is pretty clear”.

But, “the question of how fast that has to happen is something my colleagues and I will continue to debate,” she added.

“We have done a lot, and I think we have to be very mindful that our policy decisions often operate on a lag. We have to watch carefully how that’s coming through,” she warned.

Atlanta Fed President Raphael Bostic delivered a speech titled “The Path to Economic Resilience” to the Rotary Club os Savannah yesterday. There he expressed his support further further rate hike as the economy “appears to be in a pretty good place”.

His growth outlook “hasn’t changed materially” since the start of the year and output is expected to growth at a “moderately above-trend pace this year and next”, then slow to slightly less than 2%.

Regarding inflation, Bostic said he hasn’t seen a “dramatic shift” in inflation expectation or measured retail price inflation yet. And aggregate wage growth “appears to have flattened out” over the past year to a level that’s inline with fundamentals.

Bostic is comfortable to “move policy toward a more neutral stance”, where it’s “neither accommodative nor restrictive”. While neutral rate is “something we know with precision”, he believed Fed is getting close to the “lower part of most plausible estimates of the neutral rate”. And he noted the key question is the number of hikes are required to reach neutral.

He also warned of trade policy of the US. Bostic said “I began the year with a decided upside tilt to my risk profile for growth, reflecting business optimism following the passage of tax reform. However, that optimism has almost completely faded among my contacts, replaced by concerns about trade policy and tariffs. Perceived uncertainty has risen markedly. Projects already under way are continuing, but I get the sense that the bar for new investment is currently quite high. ‘Risk off’ behavior appears to be the dominant sentiment among my contacts. In response, I’ve shifted the risks to my growth outlook to balanced.”

Fed Governor Christopher Waller said that “a barrage of data” in February has challenged high view that FOMC was “making progress in moderating economic activity and reducing inflation.”

“It could be that progress has stalled, or it is possible that the numbers released last month were a blip,” he said.

“If job creation drops back down to a level consistent with the downward trajectory seen late last year and CPI inflation pulls back significantly from the January numbers and resumes its downward path, then I would endorse raising the target range for the federal funds rate a couple more times, to a projected terminal rate between 5.1 and 5.4 percent,” he said.

“On the other hand, if those data reports continue to come in too hot, the policy target range will have to be raised this year even more to ensure that we do not lose the momentum that was in place before the data for January were released,” he added.