Fed officials cast more doubt on the timing of rate cuts this year

• Fed officials had further commentary on the path of rate cuts in 2024 following Powell's remarks on Tuesday. 
• The path to getting inflation back to target levels looks uncertain, central bankers said.
• The market has mostly given up on the idea of a rate cut at the Fed's June meeting. 

Federal Reserve officials heaped more doubt on the timing of rate cuts this year, echoing Chair Jerome Powell in stating that the path to 2% inflation looks uncertain. 

Inflation will likely fall further, but the central bank is in no rush to cut interest rates at the moment, Cleveland Fed President Loretta Mester said in public remarks on Wednesday. Her comments come shortly after inflation clocked in hotter-than-expected for the month of March, the third straight month to post above-expected inflation figures. 

The Fed has projected three rate cuts to come by the end of 2024. That outcome is still possible, though it will be a "close call" and dependent on future economic data, Mester said.

"At some point, as we get more confidence, we will start to normalize policy back to a less restrictive stance, but we don't have to do that in a hurry," she added.

Strong price growth could mean that the progress in lowering inflation has come to a standstill, Fed Governor Michelle Bowman said at a separate event on Wednesday. In early April, she warned of the possibility of another rate hike if inflation continues to tread higher and the job market remains tight. 

The US added 303,000 jobs last month, more than economists expected. The jobless rate, meanwhile, dropped to 3.8%, remaining near a historic low.

"[There] is a lot of financial market activity and a lot of continued growth that we wouldn't have expected if policy was sufficiently tight," Bowman said Wednesday evening. "I think time will tell whether it is sufficiently restrictive."

New York Fed President John Williams said rates will eventually need to be lowered, but that will hinge on the strength of the economy. It's also possible the Fed will hike rates again, he added, if strong economic data shows that it's necessary.

"I definitely don't feel an urgency to cut interest rates," Williams said on Thursday, adding that the Fed funds rate was already in a "good place." 

Fed Chair Powell suggested earlier in the week that rate cuts could be delayed, causing stocks to slide. The Fed's April Beige Book also revealed that central bankers had mixed outlooks on inflation, with some officials airing concerns over a resurgence in high prices.

Price growth, meanwhile, has remained at least a full percentage point above the Fed's 2% target for nearly two years.

Inflation risks haven't been lost on investors, who have been steadily dialing back their expectations for Fed rate cuts over the last few months. Markets are now expecting just one or two rate cuts by the end of the year, according to the CME FedWatch tool, down from six cuts that were anticipated at the start of 2024.