It is reported that Cleveland Fed President Mester said that despite the impressive latest inflation data, she still believes that inflation risks are biased towards upward. She also said that the latest median forecast by policymakers - implying that there will only be one rate cut this year - is "very close" to her own expectations of the economic outlook.

Mester said that the lower-than-expected inflation data released earlier this week was a "gift," but she hoped to see more similar data before a rate cut. She said: "We have made quite good progress on inflation in the past two years. But it's still too high." "There is more work to be done on inflation to gain confidence that inflation is falling to 2%." She added: "I think inflation risks are still biased towards upward. I think there are dual risks to the labor market."

"Given the progress we have made on inflation, I think we really need to see more data to tell us, 'Okay, we can now be quite confident that inflation is on a downward trajectory, so we can start to reduce constraints.'"

The Fed policy makers' latest median forecast shows that their latest long-term stable rate expectation has been raised to 2.8%, and implies that they expect interest rates to not return to pre-pandemic levels. Mester's latest forecast for this rate is 3%.