02:42 PM EDT, 04/02/2024 (MT Newswires) -- Progress on inflation should continue this year but the disinflation process may be choppy, Federal Reserve Bank of Cleveland President Loretta Mester said Tuesday.

Mester, a voting member this year of the central bank's Federal Open Market Committee, said she needs to see additional monthly personal consumption expenditure prints in order to raise her confidence that inflation will continue its downward trajectory. This comes after the January and February readings were firmer than readings over the second half of 2023, a reminder "that the disinflation process will not be a smooth path back to 2%," she said.

"Some further monthly readings will give us a better sense of whether the disinflation process is stalling out or whether the start-of-the-year readings reflect a temporary detour on the downward path back to price stability," Mester said in prepared remarks for a speech in Cleveland. "I do not expect I will have enough information by the time of the FOMC's next meeting to make that determination."

Markets widely expect the FOMC to hold rates steady on May 1, which would be its sixth straight pause, according to the CME FedWatch Tool. Expectations for a cut at the June meeting moved up a few percentage points from Monday to about 62% on Tuesday.

The FOMC will begin reducing the fed funds rate "later this year" if the economy continues to evolve as expected, according to Mester. The central bank last month continued to project three cuts in 2024.

While economic growth is projected to moderate this year, Mester now expects that it will grow a bit above her 2% estimate of trend growth, versus a prior view that it would be under trend.

"I expect the labor market to continue to come into better balance this year, with a slight uptick in the unemployment rate from its current very low level," she said. "And I expect further progress on inflation but at a slower pace than we saw last year."

The Cleveland Fed president raised her estimate of the longer-run federal funds rate to 3% from 2.5%. The change reflects continued resilience in the economy despite high nominal interest rates, she said.