In a moderated discussion, Atlanta Fed President Raphael Bostic addressed the key question on investors’ minds: “how fast” will the Fed proceed with further rate cuts?

According to Bostic, Fed’s median projection suggests an additional 50bps of rate cuts this year, following 50bps cut in September. However, for Bostic, “My dot was 25 basis points more”.

Nevertheless, he emphasized that his stance is not set in stone. “I’m keeping my options open,” Bostic said, indicating that he would reassess based on incoming data on inflation and the labor market.

He also projected GDP growth of around 2.6% for 2024 and expects it to moderate to 2% in 2025 as household savings dwindle.

San Francisco Fed President Mary Daly signaled in a speech overnight that additional rate cuts are in the pipeline for this year, suggesting that “one or two” further reductions would be a “reasonable thing to do.”

Daly emphasized that the primary focus now is on determining “how quickly to adjust,” rather than where the ultimate destination of the easing cycle will be.

She also acknowledged that “the economy is clearly in a better place,” pointing to significant progress in reducing inflation pressures. She also highlighted that the labor market is now on a more sustainable path, which was a key concern earlier this year. With both inflation and employment showing healthier trends, Daly noted, “the risks to our goals are now balanced.”

In a speech overnight, Fed Governor Christopher Waller provided noted that recent economic data has been “uneven,” with both positive signals and areas of concern, but emphasized that the US economy remains on “solid footing.” Employment is near the Fed’s maximum objective, and inflation is approaching the target, despite some disappointing recent inflation figures.

In light of this, Waller expressed caution about the pace of monetary easing, noting that while the September 50bps cut was necessary, the Fed should now proceed with “more caution on the pace of rate cuts.” He reaffirmed his view that the Fed would reduce the policy rate “gradually over the next year.”

Looking ahead, Waller’s baseline forecast still calls for a gradual reduction in the policy rate over the next year. However, he acknowledged uncertainty about the “final destination” for interest rates, with projections for the long-run federal funds rate varying significantly among Fed officials. The range extends from 2.4% to 3.8%, with the median estimate sitting at 2.9%.

While much of the market focus is on the size of rate cuts in the near term, Waller pointed out that the “larger message” from Fed’s economic projections is the extent of policy tightening that still needs to be reversed. If the economy continues its current stable performance, Waller expects that easing will occur gradually over time.

Full speech of Fed’s Waller here.

In a speech today, Minneapolis Fed President Neel Kashkari indicated that ” further modest reductions in our policy rate will be appropriate in the coming quarters to achieve both sides of our mandate.”

Kashkari stressed that future decisions will be data-driven, stating that “ultimately, the path ahead for policy will be driven by the actual economic, inflation, and labor market data.”

While acknowledging that the current federal funds rate, set between 4.75% and 5%, remains restrictive, Kashkari noted that it is still unclear exactly how much this restrictiveness is weighing on economic growth.

However, he expressed confidence in the Fed’s progress toward its inflation goals, saying the central bank is in the “final stages of bringing inflation down to our 2% target.”