Kansas City Fed president Esther George said, “this is already a historically swift pace of rate increases for households and businesses to adapt to, and more abrupt changes in interest rates could create strains, either in the economy or financial markets,”

“I find it remarkable that just four months after beginning to raise rates, there is growing discussion of recession risk, and some forecasts are predicting interest rate cuts as soon as next year. Such projections suggest to me that a rapid pace of rate increases brings about the risk of tightening policy more quickly than the economy and markets can adjust,” she added.

Fed Chair Jerome Powell insisted in a House panel hearing that “we will not raise interest rates preemptively because we fear the possible onset of inflation.” Instead, “we will wait for evidence of actual inflation or other imbalances.” He reiterated that the transitory factors that pushed up inflation should “resolve themselves” in the coming months. And, “they don’t speak to a broadly tight economy and to the kinds of things that have led to higher inflation over time.”

“I will say that these effects have been larger than we expected, and they may turn out to be more persistent than we have expected,” he explained. “But the incoming data are very consistent with the view that these are factors that will wane over time, and inflation will then move down toward our goals and we’ll be monitoring that carefully.”

“You have a central bank that’s committed to price stability and has defined what price stability is and is strongly prepared to use its tools to keep us around 2% inflation,” he said. “All of these things suggest to me that an episode like what we saw in the 1970s … I don’t expect anything like that to happen.”

At a Fed conference overnight, Dallas Fed President Lorie Logan said that inflation appears to be “trending toward 3%”, a figure still above the 2% target.

Despite a cooling labor market, Logan highlighted that it remains “too tight,” implying that the job market’s strength could continue to put upward pressure on wages and, consequently, inflation.

Logan emphasized the need “see tight financial conditions in order to bring inflation to 2% in a timely and sustainable way”. She will be looking at “data” and “financial conditions” as the next meeting in December approaches.

With a particular focus on recent retracement in 10-year Treasury yield and broader financial conditions, Logan suggests these elements will play a pivotal role in shaping Fed’s forthcoming monetary policy decisions.

Atlanta Fed President Raphael Bostic said is a speech that the US economy is “in a good place”, and he “struggled to come up with sufficient variations on the word ‘strong'”.  And to him strong economy means “able to withstand great force or pressure”. “Tariffs, trade restrictions, and market volatility” are the headwinds. But there are also tailwinds in “recent tax reform and fiscal stimulus”. And because of strong GDP numbers in Q2 and Q3, he’s revised up 2018 and 2019 growth projections.

On monetary policy, he said “unless the data talk me out of it, I view a continued, gradual removal of policy accommodation as appropriate until we get to a neutral policy rate.” And he emphasized that the current Fed policy rate “has not yet reached a neutral stance” and Fed is “still providing accommodation”. The Fed has “yet to pump the brakes”.

Bostic’s full speech A View of the Fed’s Policy Path.