Federal Governor Christopher Waller recently advised a slow and careful approach to easing monetary policy this year and mentioned that the inflation outlook is still uncertain even though the recent economic data has been strong. The comments made by Christopher Waller are the same as those of other Fed officials who have also suggested that interest rate cuts in the near future are unlikely.
What does Fed Governor Christopher Waller say?
Waller said that the recent data has reinforced his belief that the progress on inflation seen in the latter half of 2023 will be on its course, and there is no hurry to start cutting rates.
In a speech on Thursday evening at an event organized by the Notre Dame Club of Minnesota and the University of St. Thomas, he shared his views on the interest rates, emphasizing, “What’s the Rush?”
Waller is a member of the Federal Open Market and has been on the Fed’s Board of Governors since December 2020. Additionally, he is also a voter on the Federal Open Market Committee.
Better-than-expected economic data has followed the FOMC meeting in January. The fourth-quarter real GDP has increased by a 3.3% annualized rate, along with the addition of 353000 jobs in the market. On the other hand, the core Consumer Price Index, excluding food and energy, increased by 0.4% last month and has shown an increase of 3.9% over the year.
Fed Governor Christopher Waller said,
“I am going to need to see a couple more months of inflation data to be sure that January was a fluke and that we are still on track to price stability,”
He added that the Federal Reserve does not want to make a mistake by lowering rates too quickly and causing inflation to rise again. Moreover, he believes the economy is strong right now, and the Feds should not feel rushed to cut rates too soon to boost growth.
Waller said that most of the data that has been reported to him has shown that it is safer to wait a bit longer before reducing rates than to rush and possibly make inflation worse. Waller has also brushed off economists’ worry of a possible recession due to no rate cuts. He said he does not worry much and delaying the interest cuts for a few months should not hurt the economy much if there are no big shocks.
Waller said that he expects the economy to slow down in 2024 and will keep an eye out on job-related signs and changes in what people are buying. He added that the strong job market is making wages go up, which consequently adds to the rise of inflation, and he believes that these factors might make the inflation go higher, which is why he wants to wait before introducing rate cuts.
Fed’s Waller added that there seems to be a slim chance that inflation will stay below 2% for a long time, considering the strong data they have observed in GDP and employment. He added that he is waiting to see if the inflation in January was just a one-time thing before deciding on implementing rate cuts.
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