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Fresh data shows price pressures are easing and the labor market is gradually cooling, evidence that the slowdown the Fed has tried to engineer with its rate hikes to date is underway. Still, the unemployment rate at last read was 3.9%, only a few tenths of a percentage point above where it was when the Fed first began raising rates in March 2022. UNCERTAIN PATHTraders have been betting heavily that the Fed will keep its overnight benchmark interest rate steady in the 5.25%-5.50% range for the next several months. "I'm not losing too much sleep" over the market's view "because there's a lot of uncertainty about the future path of policy," Williams said. "I'm not thinking about rate cuts at all right now," Daly said.

Persons: John Williams, Williams, Janet Yellen, I'm, Mary Daly, Daly, Jerome Powell, Christopher Waller, Oscar Munoz, Dan Burns, Michael S, Howard Schneider, David Lawder, Chizu Nomiyama, Paul Simao, Andrea Ricci, Will Dunham Organizations: Federal Reserve, New York Fed Bank, Fed, U.S, Treasury, PATH Traders, San Francisco Fed, Spelman College, Derby, Thomson Locations: U.S, New, Atlanta

"Monetary policy is in a good place for policymakers to assess incoming information on the economy and financial conditions," Cleveland Fed President Loretta Mester said on Wednesday. The Fed has kept its policy rate unchanged in the 5.25%-5.50% range since July, and after the last meeting over Oct. 31-Nov. 1, Fed Chair Jerome Powell said he is not yet confident policy is restrictive enough. Fed Governor Christopher Waller, a policy hawk like Mester, on Tuesday delivered a similar assessment. Indeed, Waller said, if the inflation decline continues for several more months, rate cuts could be in order to keep policy from becoming overly tight. Atlanta Fed President Raphael Bostic, who has for months said the Fed policy rate at 5.25%-5.50% is high enough, said Wednesday he feels data backing that view is getting clearer.

Persons: Sarah Silbiger, Loretta Mester, Mester, Jerome Powell, Christopher Waller, Waller, I'm, Thomas Barkin, Barkin, Raphael Bostic, we’ve, Lindsay Dunsmuir, Deepa Babington Organizations: El Progreso Market, Washington , D.C, REUTERS, Cleveland Fed, Richmond Fed, CNBC, Dallas Fed, Reuters, Atlanta Fed, Thomson Locations: El Progreso, Mount Pleasant, Washington ,

Speaking on CNBC, Boston Fed President Susan Collins also said the U.S. central bank must be "patient and resolute, and I wouldn't take additional firming off the table." Inflation by the Fed's preferred measure was 3.4% in September, down from its 7.1% peak last summer, but above the central bank's target. And he expressed increased confidence that the Fed can meet its inflation goal without the kind of rise in unemployment seen in the U.S. central bank's prior battles with inflation. Speaking on Thursday, Cleveland Fed President Loretta Mester, one of the central bank's more hawkish policymakers, said she had not yet assessed whether she would continue to pencil in a further rate hike. Fresh economic and interest rate projections are due to be the released at the Dec. 12-13 policy meeting.

Persons: Mary Daly, Daly, Susan Collins, Collins, Austan Goolsbee, Loretta Mester, Ann Saphir, Michael S, Pete Schroeder, Dan Burns, Balazs Koranyi, Paul Simao Organizations: Federal, San Francisco Fed, CNBC, Boston, Deutsche Bank, Chicago Fed, Fed, Cleveland Fed, Derby, Thomson Locations: Frankfurt, Germany, U.S

"Most Districts reported price growth slowed overall," the Fed said in its latest "Beige Book" summary of surveys and interviews conducted across its 12 districts through Aug. 28. It added that "nearly all districts indicated businesses renewed their previously unfulfilled expectations that wage growth will slow broadly in the near term." Data since the last Fed rate hike six weeks ago has tended to support that view, with the economy adding an average of 150,000 jobs per month over the last three months, down sharply from the prior three months. Earlier on Wednesday, Boston Fed President Susan Collins also said the central bank has the space to be patient, while acknowledging that inflation pressures, though easing, still remain too high. Home building was picking up, the Fed said, but building affordable properties is being strained by high financing costs and rising insurance premiums.

Persons: Christopher Waller, Susan Collins, Collins, Ann Saphir, Andrea Ricci, Paul Simao Organizations: Federal, Boston, New, New York Fed, San Francisco Fed, Fed, Thomson Locations: U.S, New York

The Fed has raised interest rates by 5 percentage points since March 2022 to bring down the highest U.S. inflation in four decades. "We may end up doing less because we need to do less; we may end up doing just that; we could end up doing more. Fed policymakers are widely expected to deliver a rate hike at their meeting later this month, a move that would bring the policy rate to the 5.25%-5.50% range. That could buttress the case that price pressures are weakening, which in turn could take some pressure off the central bank to hike rates again. Atlanta Fed President Raphael Bostic, speaking at yet another event on Monday, repeated his view that the Fed can be "patient" on rates and allow restrictive policy to bring down inflation without further action by the central bank.

Persons: Mary Daly, Daly, Jerome Powell, Ann Saphir, Michael Barr, Raphael Bostic, Loretta Mester, Mester, Dan Burns, Howard Schneider, Paul Simao Organizations: Federal Reserve, San Francisco Fed, Brookings Institution, San Francisco Federal, REUTERS, New York Fed, Atlanta Fed, Cleveland Fed, Thomson Locations: U.S, San Francisco , California

[1/2] The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, D.C., U.S., June 14, 2022. They expect the Fed to raise its target rate to 5.25%-5.5% at the July 25-26 meeting. And it's quite likely that if the Fed does hold off on rates it will prep markets for action later on. The last Fed forecasts released at the March meeting had penciled in a 5.1% stopping point for the federal funds rate target, where it is now. Each Fed policymaker's view of the appropriate year-end policy rate is depicted by an anonymous "dot" on a grid.

Persons: Sarah Silbiger, who've, Wrightson ICAP, Wrightson, it's, Jerome Powell's, ’ ”, Powell, Ryan Sweet, Morgan Stanley, Oscar Munoz, Ann Saphir, Michael S, Howard Schneider, Dan Burns Organizations: Eccles Federal Reserve, Washington , D.C, REUTERS, Federal Reserve, Fed, Bank of America, Citibank, Reuters Graphics Reuters, Deutsche Bank, Oxford Economics, Securities, Derby, Thomson Locations: Washington ,, U.S

And an increase in underlying core inflation to 4.7%, up from a 4.6% pace in March, underscored the less-than-steady progress on the Fed's inflation fight. In March Mester had already expected the Fed to raise the policy rate beyond its current 5.00%-5.25% range. Fed policymakers also say they are watching credit conditions closely, though Mester on Friday said that so far she's not seeing worrisome "extra" tightening from the recent regional bank failures. Odds in futures markets are running three to one in favor of a rate hike by then. Other Fed policymakers have echoed that hawkish call.

"We have two or three more very important data releases to analyze before the time of the FOMC meeting," Powell told the Senate Banking panel Tuesday. "Powell didn’t open the door to a 50-basis-point rate hike without intending to follow through with that outcome at the March FOMC meeting," Duy said. The Fed's rate hikes are designed to slow demand and spending by consumers and businesses. The survey will next publish on the Friday before the Fed meeting, and could again prove key. If inflation continues, Powell said Tuesday, at some point both individuals and businesses "will come to expect high inflation, and that will make it more self-perpetuating."

He described the slow rate of economic growth penciled in by Fed officials next year as still "modest." Only two of 19 Fed officials see the benchmark overnight interest rate staying below 5% next year, a sign of a still broad consensus to lean against inflation. In the U.S. Treasury market, which plays a key role in the transmission of Fed policy decisions into the real economy, yields were little changed to slightly lower. Powell said the speed of coming rate rises is less critical now than earlier in the year when the central bank was "front-loading" rate hikes to catch up with accelerating prices. "Our focus right now is really on moving our policy stance to one that is restrictive enough to ensure a return of inflation to our 2% goal over time, it's not on rate cuts," Powell said.

[1/3] Federal Reserve Board Chairman Jerome Powell speaks during a news conference following the announcement that the Federal Reserve raised interest rates by half a percentage point, at the Federal Reserve Building in Washington, U.S., December 14, 2022. The Fed's policy rate, which began the year at the near-zero level, is now in a target range of 4.25% to 4.50%, the highest since late 2007. In the U.S. Treasury market, which plays a key role in the transmission of Fed policy decisions into the real economy, yields were little changed. "It's not as important how fast we go," Powell said, noting the bigger question facing policymakers is where the endpoint of the Fed rate hikes is and how long it stays at that level. Any debate over easing rates would only happen when officials are confident inflation is moving down, he said.

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