Christopher Waller, Governor of the US Federal Reserve, during the Fed Listens event in Washington, DC, on Friday, September 23, 2022.
Al Drago | Bloomberg | Getty Images
Federal Reserve Governor Christopher Waller, citing a string of data showing that inflation appears to be slowing, said Tuesday that he does not believe further interest rate hikes are necessary.
However, the politician added that he would need some convincing before he would support cuts any time soon.
“Central banks should never say never, but the data shows inflation is not accelerating and I believe further rate hikes are probably not necessary,” said Waller, who has taken a hawkish stance lately, meaning that he supports tightening monetary policy.
The comments came in prepared remarks ahead of a speech at the Peterson Institute for International Economics in Washington.
Waller pointed to a range of recent data, from stabilizing retail sales to cooling in both the manufacturing and services sectors, to suggest the Fed’s higher rates have helped ease some of the demand that has contributed to the highest inflation rates in more than 40 years. .
While wage growth has been solid, internal indicators such as the rate at which workers are leaving their jobs show that the super-tight labor market that has led to higher wages has held up at levels consistent with the Fed’s 2% inflation target. signs are weakening, he added.
However, Waller, who as governor is a permanent member of the rate-setting Federal Open Market Committee, said he was not ready to support lowering interest rates.
“The economy now appears to be moving closer to what the committee expected,” he said. “However, absent significant weakening in the labor market, I need to see several more months of good inflation data before I can support monetary easing.”
The Consumer Price Index for April showed inflation at 3.4% from a year earlier, slightly lower than March, and monthly growth of 0.3% was slightly below what Wall Street economists had expected.
The Labor Department report was a “welcome relief,” Waller said, although he added that “progress has been so modest that it does not change my view that I will need to see more evidence of inflation being contained before supporting any monetary easing.” -credit policy”. “He gave the report a C plus.”
This year, markets have had to reset their expectations for monetary policy.
In the early months, futures market traders were anticipating at least six rate cuts this year, starting in March. However, a series of better-than-expected inflation data has changed that forecast, with the first contraction not expected to occur until September – with no more than two quarter-percentage-point cuts expected before the end of the year, the data showed. That CME Group FedWatch Tool.
Waller did not reveal his expectations for the timing and size of the cuts and said he would “keep it to myself for now” about what specific progress he wants to see in future inflation reports.