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A top Federal Reserve official has warned the US central bank’s progress on curbing inflation “may be stalling”, even as he threw his support behind a cut in interest rates later this month.

Christopher Waller, a Fed governor who sits on the policy-setting Federal Open Market Committee, on Monday said he backed the central bank lowering rates at its December 17-18 meeting. He said still-elevated borrowing costs were curbing demand across the world’s biggest economy, contributing to easing price pressures.

Still, Waller noted that “if the data we receive between today and the next meeting surprise in a way that suggests our forecasts of slowing inflation and a moderating but still-solid economy are wrong, then I will be supportive of holding the policy rate [unchanged in December]”.

He added there were some signs that progress towards cooling inflation to the Fed’s 2 per cent target “may be stalling” as policymakers struggle to curb price growth in the vast services sector. The overall consumer price index rose at an annual rate of 2.6 per cent in October, according to official data.

New York Fed president John Williams acknowledged in separate remarks on Monday that it would “take some time” for the inflation goal to be reached because of “uneven” progress, but he expressed confidence the central bank would eventually hit its target as housing-related disinflation continued and inflation expectations remained in check.

The implied odds of a December rate cut increased to 75 per cent from 66 per cent following the remarks from the two Fed officials, according to CME Group data based on trading in federal funds futures.

The US dollar also gave up some of its earlier gains on Monday following Waller’s remarks, leaving the currency up about 0.6 per cent against a basket of six peers in afternoon trading in New York.

Fed officials will on Friday receive an important update on the state of the labour market with November’s payrolls report, as well as new inflation data next week covering consumers and producers. Policymakers will also get fresh data on retail sales — a crucial driver of the US economy — on the first day of this month’s two-day policy meeting.

Officials have recently turned more optimistic on the trajectory of the economy, having previously worried that the labour market was heading for a sharp slowdown. They noted in a detailed summary of November’s meeting, released last week, that there had been “no sign of rapid deterioration” across the labour market.

The more sanguine outlook — coupled with renewed concerns about persistent price pressures that have kept monthly inflation readings more elevated than expected — has led to widespread support among Fed officials to move “gradually” as the central bank considers how quickly to return its monetary policy to a “neutral” setting that neither stimulates or suppresses demand.

“I feel like an MMA fighter who keeps getting inflation in a choke hold, waiting for it to tap out yet it keeps slipping out of my grasp at the last minute,” Waller said while at a conference in Washington. “But let me assure you that submission is inevitable — inflation isn’t getting out of the octagon.”

While Waller said he expected rate cuts to “continue over the next year”, he also made clear the pace of those cuts will probably slow over time. Williams said he expected interest rates to move to a neutral level stance “over time”.

The comments from Waller and Williams come in the final week before a scheduled communications blackout ahead of the December meeting.

A quarter-point cut in December would mark the third-straight gathering at which the Fed has lowered interest rates, having kicked off the process in September with a half-point reduction. That would lower the federal funds rate to a new target range of 4.25 per cent to 4.5 per cent.