Fed officials sketch case on both sides of rate debate

"The debate is really about: Do we need to do another rate increase? Or not? ... I think we're pretty close to what a peak rate would be," New York Fed President John Williams said in anin which he voiced some confidence that underlying inflation was on a downward path.

"I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the goal," she said, referring to the central bank's benchmark overnight interest rate, which is currently set in the 5.25%-5.50% range. The Fed's preferred headline measure of inflation, the personal consumption expenditures price index, was at 3% on an annual basis as of June, while the same measure stripped of volatile food and energy prices was at 4.1% and has shown slower progress in recent months back to the Fed's target.

But recent data have shown inflation slowing faster than expected, with many analysts anticipating a "disinflationary" trend may be developing that will work in the Fed's favor.

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