(Bloomberg) -- Federal Reserve Governor Adriana Kugler said she’s “cautiously optimistic” that inflation will continue to cool without a notable rise in unemployment. 

Kugler is among more than a half-dozen Fed officials set to speak Friday in speeches or broadcast interviews. Others included Governor Christopher Waller and Dallas Fed President Lorie Logan.

In recent weeks, many policymakers have indicated that interest rates will remain at a two-decade high at least through the Fed’s next meeting on March 19-20, with the first cut likely later this year. Officials are watching to see whether January’s surprise jump in consumer prices was a fluke or a roadblock on the way toward lower inflation.

Fed Chair Jerome Powell will give the view from the top next week in two days of semiannual congressional testimony on monetary policy.

(All times are NY)

Kugler Sees Inflation Progress Continuing (3:20 p.m.)

Kugler outlined various recent developments that have cooled inflation, including an easing of supply-chain pressures, a larger labor force and reduced demand in interest-rate sensitive sectors. 

She also said the Fed’s actions helped keep inflation expectations anchored, preventing both a wage-price spiral and price growth from peaking at an even higher rate. 

“I am cautiously optimistic that we will see continued progress on disinflation without significant deterioration of the labor market,” Kugler said Friday in prepared remarks for a conference at Stanford University.

Kugler added that it remains to be seen whether some of the post-pandemic economic trends, such as more frequent wage adjustments by employers and how businesses implement supply-chain lessons from this period, will impact the economy going forward. 

Daly Gives Presentation on Potential Impact of AI (1:30 p.m.)

San Francisco Fed President Mary Daly said AI is driving much faster changes in the labor marker than in the past, when new technology was adopted more slowly. It could potentially lead to better labor outcomes and reduced inequality, but that is not yet a certainty and depends on many factors.

Bostic Urges Patience, Says Fed’s Job Not Done (12:15 p.m.)

Atlanta Fed President Raphael Bostic reiterated his view that he wants to wait to start cutting interest rates until inflation recedes further so the central bank doesn’t have to go back and reverse course.

“I don’t want to have to raise rates again,” Bostic said in a moderated discussion in Orlando on Friday. “It will probably be longer before inflation gets back to our 2% target. I am willing to wait.”

Bostic acknowledged the progress on disinflation so far but said the Fed’s “job is not done.” Like his colleagues, he also expressed he’d like to see more evidence that price pressures are cooling.

Fed Releases Semi-Annual Monetary Policy Report (11 a.m.)

The Fed released its semi-annual monetary policy report Friday ahead of Powell’s testimony before Congress next week. 

Employment and earnings gaps along gender, race, ethnicity and education lines have narrowed amid high demand for workers, the report showed, though the central bank noted that substantial disparities among different groups still remain.

The central bank said that inflation has slowed “notably” but remains above the 2% target. The labor market also remains “relatively tight,” though labor demand has eased.

The Fed also said that the banking system is sound and resilient and that while acute stress from bank failures last year has “receded,” several risk areas should still be monitored.

Waller Says Fed’s Mortgage Holdings Should Dwindle (10:15 a.m.)

Fed Governor Christopher Waller said he’d like to see the central bank’s holdings of mortgage-backed securities go to zero. “It is important to see a continued reduction in these holdings,” Waller said Friday in prepared remarks at a conference in New York.

He also said he’d like a shift in the Fed’s holdings toward a larger share of short-term Treasuries. Prior to the financial crisis, about one third of the Fed’s Treasury securities holdings were bills, Waller said. Today, these short-term securities comprise less than 5% of their Treasury holdings and 3% of their total securities holdings.

Waller is on a panel discussing quantitative tightening — the Fed’s process of shrinking its asset portfolio — at the US Monetary Policy Forum hosted by the University of Chicago Booth School of Business. He said it’s important for any quantitative easing program to be followed by credible quantitative tightening to avoid inflation arising from a permanent injection of reserves into the banking system.

Logan Says Fed Must ‘Feel Our Way’ to Right Level of Reserves (10:15 a.m.)

Dallas Fed President Lorie Logan reiterated that it’ll likely be appropriate for the central bank to start slowing the pace at which it shrinks its balance sheet as the overnight reverse repo facility drains.

The Fed will need to approach decisions around the balance sheet carefully, since it’s not clear what level of reserves is enough to meet banks’ liquidity needs, she said Friday in prepared remarks at the US Monetary Policy Forum.

“We’ll need to feel our way to it by observing money market spreads and volatility,” she said. “To me, the need to feel our way means that when ON RRP balances approach a low level, it will be appropriate to slow the pace of asset runoff. But once the ON RRP is empty, there will be more uncertainty about how much excess liquidity remains.”

She also repeated that slowing the pace of QT doesn’t mean the Fed will stop letting maturing assets roll off altogether. The slower pace could allow the the run off to continue for longer, and will also mitigate the risk of liquidity stress.

Global Central Banks Shrink With Little Impact, Study Says (10:15 a.m.)

Global central banks are shrinking their balance sheets down from massive pandemic stimulus with little impact on bond or money markets, a paper prepared for the US Monetary Policy Forum said.

The effects of quantitative tightening or “QT” have been “very small (or non-existent) on average, statistically insignificant to date, and much less than the impact” of the emergency bond buying known as quantitative easing, wrote Wenxin Du of Columbia Business School, Kristin Forbes of MIT’s Sloan School of Management and Deutsche Bank’s chief US economist Matthew Luzzetti. 

The paper studied balance sheet reductions at seven central banks ranging from the Fed to the European Central bank and the Reserve Bank of Australia.

Goolsbee Says Rates Should Stay High Only As Long As Needed (10:00 a.m.)

Chicago Fed President Austan Goolsbee said officials should keep interest rates elevated only until they’re convinced inflation is on track to return to the 2% target.

“If you look historically, we’re high. And the longer we stay at that — if inflation continues falling — we’re going to have to start thinking about the employment side of the mandate,” Goolsbee said Friday in a CNBC interview on the sidelines of the Chicago Booth conference in New York.

“How long do we want to stay in that restrictive environment?” he said. “The answer, I think, should be: Only as long as we have to, that we’re convinced that we’re on path to get to the target inflation.”

The Chicago Fed chief said he “wouldn’t be surprised if we found out there was a lot of noise” in the January inflation data. He also suggested eventual easing would be “relatively gradual.”

Barkin Says There’s No Battle With Markets (8:30 a.m.)

Richmond Fed President Thomas Barkin said markets are pricing in fewer interest-rate reductions this year in response to economic data, not because the central bank is winning a battle with investors.

“Lord knows, I’m not spending any time trying to have swagger against the market,” Barkin said in a CNBC interview. Economic data has “come in more consistent with our forecast and therefore the markets have adjusted. And I think if the data comes in different then we’d adjust.”

Barkin said he didn’t take much signal from a report Thursday showing the Fed’s preferred gauge of underlying inflation rose in January at the fastest pace in nearly a year, noting January figures are volatile and affected by seasonality.

The Richmond chief said he was hopeful inflation’s going to come down and “then it makes the case for why you’d want to start normalizing rates.”

Apollo’s Slok Says Fed Won’t Cut Rates in 2024 (8:15 a.m.)

Apollo Management Chief Economist Torsten Slok said that a re-accelerating US economy, coupled with a rise in underlying inflation, will prevent the Fed from cutting interest rates in 2024. 

“The bottom line is that the Fed will spend most of 2024 fighting inflation,” Slok wrote in a Friday note to clients. “As a result, yield levels in fixed income will stay high.”

--With assistance from Craig Torres, Carter Johnson, Catarina Saraiva, Steve Matthews, Nazmul Ahasan, Matthew Boesler, Molly Smith and Michael McKee.

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