(Bloomberg) -- Federal Reserve Bank of Cleveland President Loretta Mester said policymakers will probably gain confidence to cut interest rates “later this year” if the economy evolves as expected, but said she doesn’t see a need to rush.

Meantime, she said Fed officials want to see more evidence that inflation is cooling toward their 2% target, and cautioned against lowering borrowing costs too soon.

“It would be a mistake to move rates down too soon or too quickly without sufficient evidence that inflation was on a sustainable and timely path back to 2%,” Mester said Tuesday at an event in Columbus, Ohio. “If the economy evolves as expected, I think we will gain that confidence later this year, and then we can begin moving rates down.”

Her remarks echoed those from several Fed policymakers in recent weeks, including Chair Jerome Powell, who signaled they’re comfortable taking their time as they consider lowering their benchmark lending rate from a two-decade high.

Speaking separately on Tuesday, Minneapolis Fed President Neel Kashkari celebrated the substantial improvement made on inflation but indicated more progress is needed. 

“We’re not all the way there yet, but we’ve made a lot of progress on inflation,” Kashkari said at an event in Mankato, Minnesota. “If we just think we’re going to continue what we’ve been experiencing, we’re on track to get back to our 2% target,” he said, pointing to three- and six-month inflation measures as “basically” at 2%.

In an essay Monday, Kashkari said Fed officials have time to assess incoming data before lowering rates.

Mester, who votes on monetary policy decisions this year, also said she still expects three rate cuts in 2024, consistent with the forecast she submitted ahead of the Fed’s December meeting. Speaking on a call with reporters after her speech, she said that the rate cuts don’t necessarily need to come at the quarterly meetings when the Fed releases those forecasts, known as the Summary of Economic Projections. 

“I don’t think tying when we move to the SEP is necessary, as long as we’re communicating well,” Mester said.

‘Good Place’

Policymakers have held interest rates in a range of 5.25% to 5.5% since July and have signaled that the next move is likely a cut. Markets had anticipated that to come at the Fed’s next meeting, in March, but have pivoted those bets to the May or June meetings following commentary from Fed officials and a robust January jobs report.

Mester said last month that it was probably too early to consider cutting rates at the March Federal Open Market Committee meeting.

The Cleveland Fed chief on Tuesday said that a resilient labor market and strong economic growth give the US central bank time to assess incoming data, while keeping rates at current levels, to make sure that inflation keeps falling as it has been. At the same time, she pointed to several risks to the economic outlook, including heightened geopolitical risks, easing financial conditions, banking-sector stress around commercial real estate lending and an unexpected deterioration in the labor market. 

Once the Fed starts cutting rates, it will likely do so at a gradual pace, she added.

“The FOMC’s job now is to ensure that the economy reaches an even better place by calibrating monetary policy to achieve our dual mandate goals of price stability and maximum employment,” Mester said. “Risk management will take center stage.”

Philadelphia Fed President Patrick Harker said in separate comments Tuesday that a soft landing for the US economy is in sight. 

“The data point to continued disinflation, to labor markets coming into better balance, and to resilient consumer spending — three elements necessary for us to stick to the soft landing we remain optimistic to achieve,” he said. “With inflation continuing to fall back to our 2% target, with employment remaining strong, and with consumer sentiment looking up, the runway at our destination is in sight.” 

Increased productivity and strong employment growth could mean that the neutral rate of interest, where policy is neither stimulative nor restrictive, has moved up in the post-pandemic economy, Mester said. That could mean policy needs to stay restrictive for longer to fully restore price stability and maximum employment, she said.

Mester also said it will likely be appropriate for the Fed to begin slowing the pace at which it allows maturing assets to roll off its balance sheet — a process known as quantitative tightening — at some point this year, though there’s no urgency to do so now.

Mester announced last year that she will step down in June after reaching the mandatory retirement age of 65.

--With assistance from Steve Matthews.

(Updates with Harker comments in fifteenth paragraph.)

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