Fed's Waller sees some progress on inflation, no rate hike needed

Fed policymakers have turned cautious on the outlook for inflation and monetary policy in recent months, and Waller, like many of his colleagues, did not repeat his view from recent speeches that a rate cut is likely later this year.

The remains strong, he said, and while consumer price inflation slowed in April after the first three months of the year, the progress was "modest," with as measured by the personal consumption expenditures price likely running at an annualized 3.4% in the recent three months.

But he also said he sees some signs of moderation ahead, citing flat retail sales in April, rising delinquencies on cards and auto loans, and a widely followed survey of non-manufacturing businesses suggesting a deceleration in activity. Job creation also has slowed, and the unemployment rate ticked up to 3.9% in April.

"The economy now seems to be evolving closer to what the Committee expected," Waller said, referring to the central bank's policy-setting . "Nevertheless, in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy."

The Fed has kept its policy rate in the 5.25%-5.50% range since last July.

Traders expect the central bank to deliver a first rate cut in September, and see better-than-even odds of a second cut at the Fed's final meeting of the year in December.