(Bloomberg) -- A slew of Federal Reserve officials emphasized Friday that there is no urgency to lower interest rates, pointing to still-elevated inflation and a robust labor market.

That included comments from both the Boston Fed’s Susan Collins as well as San Francisco’s Mary Daly. Atlanta’s Raphael Bostic repeated his view for one rate cut toward the end of the year, and Kansas City’s Jeffrey Schmid noted he prefers a “patient” approach to reductions. 

“There’s absolutely, in my mind, no urgency to adjust the policy rate,” Daly said at an event in San Francisco. “Policy is in a good place right now, and I need to be fully confident that inflation is on track to come down to 2% — which is our definition of price stability — before we would consider a rate cut.”

Schmid also said policymakers should wait for “clear and convincing” evidence that inflation is headed back toward 2% before lowering interest rates, rather than adjusting policy preemptively. 

“With inflation running above target, economic growth continuing to show momentum, and elevated prices across a range of asset markets, the current stance of monetary policy is appropriate,” Schmid said in a speech Friday in Overland Park, Kansas. 

“Therefore, rather than preemptively adjust the policy rate, I would prefer to be patient and wait for clear and convincing evidence that inflation is on track to hit our 2% target before adjusting the stance of policy,” he said.

The Kansas City Fed chief also said recent price pressures have been concentrated in the services sector, supported by a tight labor market. Better balance between the supply and demand for labor will likely be needed for the Fed to achieve price stability, he said.

Fed Chair Jerome Powell and other policymakers have said they don’t want to start cutting rates until they have sufficient confidence that US inflation is headed toward the central bank’s 2% target on a sustainable basis. Policymakers have held interest rates at a more than two decade high since July.

Disappointing Data

Recent inflation data has been higher than hoped. Consumer prices excluding food and energy climbed 0.4% in March and 3.8% from a year earlier, the same as the month prior.

“This recent data underscores what I believe is the need for the Federal Reserve to be patient as we wait for clear and convincing evidence that inflation is on track to sustainably return to 2%,” Schmid said. 

Investors are now betting on just two rate cuts this year, beginning in September. 

Earlier Friday, Collins said she believes two cuts are more likely than three in the current economic environment. Chicago’s Austan Goolsbee, meanwhile, repeated that housing inflation will need to come down in order for the Fed to reach its 2% target.

The Fed’s preferred gauge of inflation rose 2.5% in February from a year earlier. March figures for that measure, the personal consumption expenditures price index, are due later this month.

Answering questions after his speech, Schmid said there’s “reason to believe” rates will stay higher for longer.

“We’ve got to get this inflation thing right,” he said. “We need to let this policy work its way through the system like it is.”

Balance Sheet

Schmid also said he prefers a “much smaller” Fed balance sheet with a shorter average maturity. He added he’d like the balance sheet to be primarily composed of Treasury securities. 

“The balance sheet remains large and continues to put downward pressure on long-term interest rates,” he said. “With inflation running above target, a tight labor market, and historically high equity valuations, the economy and financial markets no longer require support from a large central bank balance sheet.”

Schmid was named to lead the Kansas City Fed last August. The former president and chief executive officer of the Southwestern Graduate School of Banking Foundation at Southern Methodist University’s Cox School of Business was a longtime banker and bank regulator.

--With assistance from Catarina Saraiva, Alexandra Harris, Molly Smith and Vince Golle.

(Adds additional comments from other Fed officials.)

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