U.S. Federal Reserve Governor Christopher Waller during a Fed Listens event in Washington, DC, on Friday, September 23, 2022.
Al Drago | Bloomberg | Getty Images
Federal Reserve Governor Christopher Waller said Tuesday that he doesn’t think further interest rate hikes are necessary, citing a raft of data that shows inflation appears to be easing.
However, the policymaker added that he still needs convincing before endorsing cuts any time soon.
“Central bankers should never say never, but the data suggests that inflation is not accelerating and I believe further rate hikes are probably unnecessary,” said Waller, who has been generally hawkish in his recent views, so supports tighter ones monetary policy.
The comments came in prepared remarks for an appearance at the Peterson Institute for International Economics in Washington.
Waller pointed to a range of recent data, from falling retail sales to slowdowns in both manufacturing and services, suggesting that the Fed’s higher interest rates have helped dampen some of the demand that has contributed to the highest inflation rates had contributed for more than 40 years.
Although wage gains have been solid, internal metrics such as the rate at which workers are leaving jobs show that the extremely tight labor market, which had recently driven wages to levels in line with the Fed’s 2% inflation target, has shown signs of easing has. he added.
Still, Waller said he was not prepared to support rate cuts. As governor, Waller is a permanent voting member of the Federal Open Market Committee, which sets interest rates.
“The economy now appears to be moving closer to the committee’s expectations,” he said. “However, as long as there is no significant weakening in the labor market, I need several more months of good inflation data before I can support an easing of monetary policy.”
April’s consumer price index showed inflation at 3.4% year-on-year, down slightly from March, with the monthly increase of 0.3% slightly below Wall Street economists’ expectations.
The Labor Department report was “a welcome relief,” Waller said, although “the progress was so modest that it did not change my view that I need to see more evidence of moderation in inflation before I support easing monetary policy.” He gave the report a grade of C-plus.
Markets have had to recalibrate their expectations of monetary policy this year.
In the first few months, futures traders have priced in at least six rate cuts this year starting in March. However, a series of higher-than-expected inflation data changed that outlook with the first cut not expected until September at the earliest – with a maximum of two cuts of a quarter of a percentage point each before the end of the year, according to CME Group’s FedWatch tool.
Waller did not specify his expectations for the timing or extent of the cuts, saying he would “keep it to myself for now” about what specific progress he would like to see in future inflation reports.
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2024-05-21 13:41:48
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