02:05 PM EDT, 05/21/2024 (MT Newswires) -- Several more months of "good inflation" data are likely required to support a case for a reduction in the Federal Reserve's benchmark lending rate, Governor Christopher Waller said Tuesday.

In a bid to tame inflation, the central bank's Federal Open Market Committee increased interest rates by 525 basis points from March 2022 through July 2023. It has kept rates unchanged since then, with its latest pause coming earlier this month when it said there's been "a lack of further progress" in bringing inflation down in recent months. The FOMC's Summary of Economic Projections showed in March that policymakers continued to expect three rate cuts this year.

"After a run of great data in the latter half of 2023, it seemed that significant progress on inflation would continue and that rate cuts were not far off," Waller said in remarks prepared for a speech in Washington, DC. "However, the first three months of 2024 threw cold water on that outlook, as data on both inflation and economic activity came in much hotter than anticipated."

Inflation data for April indicated that progress toward the FOMC's 2% target has likely resumed, according to Waller. "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," he said.

Official data showed last week that US consumer inflation increased at a softer-than-forecast sequential pace last month.

Looking ahead, Waller expects "some moderation" in economic activity as retail sales were flat last month and revised down in the previous two months. The Institute for Supply Management indicated that production in both manufacturing and non-manufacturing businesses contracted in April.

"One month does not constitute a trend, but this data suggests that policy is doing its job to moderate aggregate demand, which will support renewed progress in lowering inflation," Waller said, adding that he also sees labor market data backing that outlook.

On Monday, Fed Vice Chair Philip Jefferson said it's likely "too early" to say if the recent slowdown in the disinflationary process will last for long. Separately, Fed Vice Chair for Supervision Michael Barr said the same day the current restrictive monetary policy likely needs additional time to help the FOMC achieve its inflation target.

Markets are widely expecting that the FOMC will again hold interest rates steady at its next two meetings scheduled for June and July.