Fed Policymakers Still Cautious on Inflation and Policy

• Federal Reserve officials are not ready to say inflation is heading to the central bank's 2% target after data last week showed a welcome easing in consumer price pressures in April, with several on Monday calling for continued policy caution.
• "It is too early to tell whether the recent slowdown in the disinflationary process will be long lasting," Fed Vice Chair Philip Jefferson told the Mortgage Bankers Association conference in New York, even as he called the April data "encouraging." Jefferson described current monetary policy as restrictive and declined to say if he expected rate cuts to commence this year, only noting that he will be carefully assessing incoming economic data, the outlook, and the balance of risks.
• Like Jefferson, Barr reinforced the Fed's overarching message that rate cuts, highly anticipated by markets, are on hold until it is clear inflation will return to the Fed's 2% target. "We will need to allow our restrictive policy some further time to continue its work," Barr said.
• Cleveland Federal Reserve Bank President Loretta Mester continues to believe that inflation will fall this year, though more slowly than she had expected. However, the lack of progress on inflation in the first quarter, along with a stronger-than-expected economy, means she no longer sees three rate cuts this year as likely.
• Finally, San Francisco Fed President Mary Daly said she sees no evidence of the need to hike rates, but at the same time, is "not confident" that inflation is falling toward 2% and sees no urgency to cut rates.

(Source: Reuters)