Federal Reserve officials believe that inflation is expected to remain on a downward trend, indicating no rush to cut interest rates.

Overnight, Federal Reserve officials have been intensively active, firmly believing that inflation is heading towards the 2% mark, and refusing to predict the specific timing of the first rate cut.
Despite the strong labor market, Federal Reserve policymakers still expect inflation to fall this year and are not in a hurry to cut policy interest rates from the range of 5.25%-5.5% maintained since July last year.

Dallas Fed President Logan said on Thursday that she remains concerned about the upward risk of inflation and warned that the Fed needs to maintain "flexibility" and "keep all options open" when watching data and deciding how to respond.

Logan said at an event in El Paso, Texas, "We should not lock monetary policy into any particular path, which is very important. I think it is too early to consider a rate cut."

Although U.S. inflation has been nearly 3% rather than 2% so far this year, Logan said, "I think there's good reason to believe that inflation is moving toward 2% — and we're still on that path, perhaps a little slower and a little bumpy than longing thought at the beginning of the year." ”

On Thursday morning, New York Fed President Williams told the New York Economic Club that he believes there is "sufficient evidence" to suggest that monetary policy is restrictive and helps bring the inflation rate down to the Federal Reserve's target of 2%. He expects inflation to be close to 2% next year.

Williams said the Fed would "lower interest rates at some point," but the specific timing is unclear. He pointed out that given the strong economic performance, "I don't feel any urgency" to lower rates.

Williams, Logan, and other Fed policymakers are expected to keep interest rates unchanged at their next meeting in about two weeks, while collecting more economic data.

Chicago Fed President Gulspie said in an interview with the international edition of the U.S. cable TV news network on the same day that a key issue is whether further improvement in inflation will lead to a rise in the unemployment rate, and whether the help from the improvement in the supply chain and other forces that significantly eased price pressures last year is diminishing.

"Now the question everyone is pondering is... have we returned to the traditional trade-off between employment and inflation?" Gulbis said.

The government report released on Thursday showed that the US economy rose by 1.3% quarter-on-quarter in the first quarter, which was lower than previously expected, as household spending increased less than expected.

On Friday, the US Department of Commerce will also release the monthly US Personal Consumption Expenditures (PCE) Price Index, at which point policymakers will have a new understanding of inflation progress. Economists estimate that the year-on-year growth rate of core PCE inflation in April will remain unchanged at 2.8%, while the Fed's inflation target is 2%.

Other key data includes the May employment report, which will be released next Friday. The unemployment rate in April was 3.9%, only a few percentage points higher than when the Fed first began raising rates to combat inflation in March 2022.

The market generally expects that at the policy meeting from June 11th to 12th, Federal Reserve officials will revise down their previous forecast of three interest rate cuts this year to a more closely aligned one or two rate cuts as currently anticipated by the financial markets.

In the past few months, although Federal Reserve officials no longer expect further tightening of policy this year due to higher-than-expected inflation, they have not predicted the timing of the first interest rate cut.

Atlanta Fed President Bostic told Fox Business Network on Thursday, "I don't think we will cut interest rates in July. If the data supports it, I am open, and if September is the right time, then it's September. Likewise, if December is the right time, then it's December. If February next year is the right time, then it's February next year. I will really let the data and information at hand tell me when is the right time to adjust policies."

"When asked how much the Fed might cut rates once it starts cutting, Williams responded, 'If I don't even know when we're going to cut, how can I answer that question?'"