Fed Waller ‘inclined’ to cut rates, but worried about inflation | Wilnesh News

Federal Reserve Governor Christopher Waller said on Monday that he expects to cut interest rates in December but is concerned that recent inflation trends could change his mind.

“Based on the economic data available today and forecasts that inflation will continue to fall to 2% over the medium term, I am currently inclined to support a reduction in policy rates at the December meeting,” Waller said at the December meeting. In Washington Money Speech delivered at policy forum.

However, he noted that “that decision will depend on whether the data we receive before then surprises higher and changes my forecast for the path of inflation.”

Waller cited recent data suggesting progress on inflation may be “stagnant.”

In October, the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, showed that overall inflation rose to 2.3% annually, while core prices, which exclude food and energy costs, rose to 2.8%. The Fed’s target interest rate is 2%.

While the data was in line with Wall Street expectations, it was an increase from the previous month and evidence that despite progress, the central bank’s goals remain elusive.

“Overall, I feel like an MMA fighter constantly choking the bloat and waiting for it to go away, but it always slips out of my grasp at the last moment,” Waller said. Said during mixed martial arts. “But I assure you, capitulation is inevitable – inflation is not going out of the octagon.”

The market expects the Federal Reserve to cut its benchmark overnight borrowing rate by another 25 percentage points when it meets on December 17-18. This follows reductions of half a percentage point and a quarter of a percentage point in September and November respectively.

“As of today, my preference is to continue the work we have started and return monetary policy to a more neutral environment,” Waller said.

Waller said he would pay close attention to upcoming employment and inflation data. The U.S. Bureau of Labor Statistics will release job openings and nonfarm payrolls reports this week, with the latter coming after just 12,000 new jobs were added in October, largely due to labor strikes and weather problems.

Waller said that despite the slowdown in inflation progress, the health of the broader economy made him feel it was appropriate to continue to ease monetary policy.

“After we cut interest rates by 75 basis points, I believe there is strong evidence that policy continues to be significantly constrained, and another rate cut will only mean we are not pressing the brake pedal as hard,” he said.