Another hotter-than-expected inflation reading Friday is likely to reinforce the Federal Reserve’s cautious stance on how quickly to cut interest rates this year.

The Labor Department said Friday that its Producer Price Index — which tracks the prices businesses pay to manufacture products and services — rose 0.3% from December to January, exceeding forecasts.

From a year earlier, it rose 0.9% in January, nearly matching the 1% increase in December and far more than the drop of 0.6% economists expected.

Those hot producer prices follow a Tuesday release of the Consumer Price Index showing that consumer prices in January also rose by more than forecast.

That caused markets to push out bets on the timing of the Fed's first rate cut to June from May and sent stocks tumbling. Stocks opened lower again on Friday.

Fed officials have been trying to send signals over the last month and a half that cuts will likely happen later than some investors might expect.

The latest warning came Thursday night from Atlanta Fed President Raphael Bostic, who said in a speech that a rate cut would likely have to wait until the third quarter of the year.

"My expectation is that the rate of inflation will continue to decline, but more slowly than the pace implied by where the markets signal monetary policy should be," Bostic said. "Right now, a strong labor market and macroeconomy offer the chance to execute these policy decisions without oppressive urgency."

San Francisco Fed President Mary Daly added another note of caution Friday in a separate speech, saying "progress is not victory."

"To finish the job will take fortitude," Daly said. "We will need to resist the temptation to act quickly when patience is needed and be prepared to respond agilely as the economy evolves."

Daly said the Fed can take a more "gradual approach" to cutting rates, clarifying that doesn't mean slowing the pace, but rather avoiding cutting abruptly or urgently.

When asked about the median projection from Fed officials for three rate cuts this year, Daly said she thought that's "still a good baseline."

Daly says her expectations for the economy haven't changed much since December and that the recent inflation reports haven't shaken her confidence that prices are moving in the right direction. She expects inflation will come down gradually and doesn't buy into the notion that the last mile will be a tough grind to get inflation back down to the Fed's 2% target.

"It’s not will we go in the right direction it’s how quickly will we get there," she said.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

'Later this year'

Investors began the year thinking the Fed would move much more aggressively and predicted the first cut would happen in March. They had those hopes dashed when Fed Chair Jay Powell essentially took it off the table at a Jan. 31 press conference and in a Feb. 4 appearance on the TV program "60 Minutes."

A chorus of other Fed officials have also urged patience in a series of recent speeches, including Richmond Fed President Tom Barkin, Boston Fed President Susan Collins, and Cleveland Fed President Loretta Mester. Collins and Mester predicted cuts would likely happen "later this year."

Fed Vice Chair for Supervision Michael Barr said Wednesday that "January's report on consumer product index inflation is a reminder that the path back to 2% inflation may be a bumpy one," referring to the central bank's 2% target.

A more dovish reaction came from Chicago Fed President Austan Goolsbee, who soothed market fears Wednesday by saying that a hotter-than-expected reading on consumer prices doesn't mean the central bank won't be able to cut rates in 2024.

"Let’s not get amped up on one month of CPI that was higher than it was expected to be," Goolsbee said.

Read more: Inflation update on everyday expenses: Prescription drugs down, pet care way up

The most recent formal assessment from Fed officials is a report known as the Summary of Economic Projections (SEP) that currently projects three rate cuts this year without saying when they would begin. Officials will update that assessment at their next policy meeting in March.

Bostic, a voting member of the committee that decides the direction of rates, said Thursday that inflation pressures are broader than he would like.

When he examined the Fed’s preferred inflation gauge — the Personal Consumption Expenditures price index — more than a third of prices in that basket rose at rates that were at or above 5% in December, he noted.

Bostic also said he thinks inflation for goods could rebound as many businesses still have inventories to work through and could ramp up orders for products once the inventories are depleted.

"Victory is not clearly in hand and leaves me not yet comfortable that inflation is inexorably declining to our 2% objective," he said. "That may be true for some time, even if the January CPI report turns out to be an aberration."

In a Friday interview with CNBC Bostic was a little more specific about when cuts could begin: "Summertime," he said.

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