Federal Reserve Board of Governors member Christopher Waller attends a Federal Reserve listening event in Washington, DC on September 23, 2022.
Al Drago | Bloomberg | Getty Images
Federal Reserve Governor Christopher Waller said on Monday that future interest rate cuts will not be as deep as the steep cut in September, as he expressed concern that the economy may still be operating faster than expected.
Citing recent reports on employment, inflation, gross domestic product and incomes, the policymaker said, “the data suggests the economy may not be slowing as much as expected.”
“While we don’t want to overreact to this data or look at it too closely, I think all the data suggests that monetary policy should be more cautious in the pace of rate cuts than it was at the September meeting,” said Waller, who was prepared for a conference at Stanford University. Speech.
The Federal Open Market Committee took the unusual step of lowering its benchmark interest rate by half a percentage point, or 50 basis points, at its September meeting to a target range of 4.75% to 5.00%. In the past, the Fed has only done this in times of crisis because it prefers to adjust in increments of a quarter of a percentage point, or 25 basis points.
In addition to the rate cut, officials have said another half-percentage point cut is likely at the final two meetings in 2024, and another full percentage point cut in 2025.
“Whatever happens in the short term, my baseline still calls for a gradual reduction in policy rates over the next year,” he said.
Key data from the Federal Reserve has been mixed in recent days. After being soft throughout the summer, the labor market reported strong data in September, with the Consumer Price Index inflation gauge slightly above expectations and GDP also remaining strong.
exist final revision Regarding growth in the second quarter, the Ministry of Commerce also raised the level of total domestic income growth to 3.4%, an adjustment of 2.1 percentage points from the previous estimate, which is closer to GDP. The savings rate also adjusted significantly to 5.2%.
“These revisions suggest the economy is much stronger than previously thought, with few signs of a significant slowdown in economic activity,” Waller said.
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