Federal Reserve Board Governor Christopher Waller during a Fed Listening event in Washington, DC, Friday, September 23, 2022.
Al Drago | Bloomberg | Getty Images
Federal Reserve Governor Christopher Waller said on Tuesday that he did not see the need to raise interest rates further, citing a series of data showing that inflation appeared to be slowing.
However, the policymaker added that he would need some convincing before he would be quick to back cuts.
“A central banker should never say never, but the data shows that inflation is not accelerating, and I think further increases in policy rates may not be necessary,” Waller said. His recent views have been generally hawkish, which This means he supports tightening monetary policy.
The comments were made in prepared remarks delivered at the Peterson Institute for International Economics in Washington.
Waller pointed to a slew of recent data, from flattening retail sales to cooling manufacturing and services, as suggesting the Fed’s rate hikes could help ease some of the demand that has led to the highest levels in more than 40 years. of inflation rate.
While wage growth has been solid, internal indicators such as worker turnover rates show that the extremely tight labor market that has driven wage gains has remained consistent with the Federal Reserve’s 2% inflation target but is showing signs of easing.
Waller, however, said he was not ready to support a rate cut. As governor, Waller is a permanent voting member of the rate-setting Federal Open Market Committee.
“The current economic development seems to be closer to the committee’s expectations,” he said. “Nonetheless, in the absence of significant labor market weakness, I would need to see a few more months of good inflation data before I feel comfortable supporting an accommodative monetary policy stance.”
The consumer price index in April showed that the inflation rate was 3.4%, a slight decrease from the same period last year, and the monthly increase was 0.3%, slightly lower than the expectations of Wall Street economists.
Waller said the Labor Department report was “reassuring” and that while “progress has been so limited, it does not change my view that I need to see more of a slowdown in inflation before supporting any loose monetary policy.” Evidence. He gave the report a C+.
The market has had to readjust its expectations for monetary policy this year.
In previous months, futures market traders expected at least six interest rate cuts this year starting in March.However, a run of higher-than-expected inflation data has changed that outlook, with the first rate cut not expected to happen until September at the earliest – with a maximum of two quarter-percentage point cuts before the end of the year, according to the data. CME Group’s Fed Watch tool.
Waller did not reveal his expectations for the timing or magnitude of a rate cut and said he would “keep secret for now” what specific developments he would like to see in future inflation reports.
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