ISTANBUL

The head of the Federal Reserve Bank of Cleveland said it is "too soon" to declare victory over inflation despite the Fed's aggressive monetary tightening.

"Substantial progress has been made on the inflation front since inflation peaked in 2022, in the range of 7 to 9 percent, depending on the measure," Loretta Mester said Thursday during her speech at an event in Wooster, Ohio.

"In the second half of last year, inflation readings came in lower than expected, and PCE (personal consumption expenditures) inflation was running at about our 2 percent goal over those six months," she said. But, the annual measures of inflation remained elevated, she noted.

Mester said she expects the progress on inflation to slow this year compared to last year since supply chain disruptions and bottlenecks have improved over the past three years and the labor market has been normalizing.

The president of the Cleveland Fed, however, stressed that progress on inflation will depend more on moderating demand, while the lack of progress has been disappointing so far this year.

While producer inflation in April rose 2.2% annually and 0.5% on a monthly basis, both above market estimates, the consumer inflation annually rose 3.4% in April, and monthly increased 0.3%, both slowing down from March. The annual figures are still above the Fed's target of 2%.

"But the recent readings have not inspired greater confidence in me, and we will need to accumulate further data over the coming months to have a clearer picture of the inflation outlook," she said. "I now believe that it will take longer to reach our 2 percent goal than I previously thought."

Mester has a voting right in the Federal Open Market Committee this year.