Two top Federal Reserve officials signaled that the central bank may cut interest rates later this year as inflation has shown signs of easing — but warned not to expect a rate cut this month.

John Williams, the president of the New York Fed, told The Wall Street Journal on Tuesday that the cooling labor market coupled with inflation data from the last three months show that economic conditions are getting us closer to a disinflationary trend that were looking for.

These are positive signs,” Williams said, adding: “I would like to see more data to gain further confidence inflation is moving sustainably to our 2% goal.

Christopher Waller, a member of the Feds board of governors, told the Journal on Wednesday that the central bank would like to see another month or two of good inflation data before moving ahead with a rate cut possibly in September.

The time to lower the policy rate is drawing closer,  Waller told an economic gathering in Kansas City on Wednesday.

Loretta Mester, the former president of the Cleveland Fed, told the Associated Press on Wednesday that should inflation keep cooling, as she and other Fed officials expect, the central bank should cut rates this year.

It really looks like inflation has resumed its downward path, Mester told AP. And thats very good. Thats kind of what were looking for.

Mester added that central bankers want inflation to get down in a sustainable way to our 2% goal.

Last week, the federal government reported that consumer prices declined slightly from May to June, bringing inflation down to a year-over-year rate of 3%, from 3.3% in May. 

So-called core prices, which exclude volatile energy and food costs and often provide a better read of where inflation is likely headed, climbed 3.3% from a year earlier, below 3.4% in May.

In his remarks Monday, Fed Chair Jerome Powell stressed that the Fed did not need to wait until inflation actually reached 2% to cut borrowing costs.

If you wait until inflation gets all the way down to 2%, youve probably waited too long, Powell said, because it takes time for the Feds policies to affect the economy.

But Williams cautioned that even if the Fed started to lower rates, they would still remain at a level that makes borrowing quite expensive.

A restrictive stance of policy that we have in place is appropriate, Williams told the Journal. 

I do think there is a decision ahead of us at some point to decide, not to get out of a restrictive stance of policy, but to lower interest rates in a way that lessens how restrictive policy is.

Last week, JPMorgan Chase CEO Jamie Dimon warned that inflation and interest rates may stay higher for longer than expected.